Specimens of human vertebral cancellous bone were compressed to well past mechanical failure (15% strain) in the infero-superior direction. The mechanisms of failure were examined microscopically and histologically. The primary mechanism of failure was shown to be microscopic cracking rather than overt failure of the trabecular elements. The morphology of the cracks was consistent with an hypothesis that they were the result of shear stress (or strain) in the tissue. Complete fracture of trabeculae was confined to elements oriented transversely to the direction of loading. The tissue's ultimate strength and residual strength after compressive failure were both strongly correlated to tissue stiffness (R² = 0.88 and R² = 0.71, respectively). It is proposed that cancellous bone strength may be a consequence of the adaptation of bone stiffness to applied stresses. With removal of the load, all specimens recovered at least 94% of their original height. Implications of energy dissipation by microcracking for recovery and maintenance of overall trabecular architecture are discussed.