In this research work, real-time three-point bending coupled with the scanning electron microscopy (SEM) technique were used to study the crack formation and growth of air plasma spraying (APS) thermal barrier coatings (TBCs). The acquired micrographs were then used to study the strain fields in the vicinity of the cracking region using digital image correlation (DIC) analysis. Fractography analysis for the fractured regions of the APS coatings was also discussed. Based on real-time observation, it was found that roughness of the coatings’ free surface (e.g., valleys) can promote the initiation of cracks since it acts as stress concentration points. Pores and splats features of the coating microstructure contribute to crack branching and crack path deflection, respectively. The former phenomenon (i.e., crack branching) negatively affects the lifetime of the TBC system as it results in an increased fracture area, while the latter can improve the fracture toughness of the coatings and its durability through improving the coating’s ability to dissipate the energy required for crack propagation.