Formation of bubble clusters in soft tissues is a potential injury mechanism in therapeutic ultrasound treatments. To study this phenomenon, transparent tissue-mimicking agarose phantoms were subjected to a series of multiple-cycle ultrasound bursts, using a burst wave lithotripsy (BWL) protocol, and simultaneously imaged with a high-speed camera. The negative pressure in the initial bursts causes preexisting sub-micron bubbles to expand sufficiently to become visible in images (~200 microns). Additional bubbles appear continuously during the subsequent bursts. A Rayleigh-Plesset-type bubble dynamics model, which is generalized to include elastic resistance and damage mechanisms, is developed and used to explain key observations. It is proposed that material fatigue leads eventually to irreversible fracture-like failure. In addition to isolated, approximately spherical bubbles, long tunnel-like features are observed, which seemingly comprise lines of joined bubbles along a possible fracture or defect. Statistics regarding the geometry of these features are reported for agarose phantoms of different stiffness. A mechanism for the formation and observed growth of these long features is proposed, wherein defect/crack growth allows the movement of initially trapped bubbles within the phantom. [Work supported by NIH NIDDK grant DK043881.]