Gamma radiation is widely used for sterilization of human cortical bone allografts. Previous studies have reported that cortical bone becomes brittle due to gamma radiation sterilization. This embrittlement raises concern about the performance of a radiation sterilized allograft in the presence of a stress concentration that might be surgically introduced or biologically induced. The purpose of this study was to investigate the effect of gamma radiation sterilization on the fracture resistance of human femoral cortical bone in the presence of a stress concentration. Fracture toughness tests of specimens sterilized at a dose of 27.5 kGy and control specimens were conducted transverse and longitudinal to the osteonal orientation of the bone tissue. The formation of damage was monitored with acoustic emission (AE) during testing and was histologically observed following testing. There was a significant decrease in fracture toughness due to irradiation in both crack growth directions. The work‐to‐fracture was also significantly reduced. It was observed that the ability of bone tissue to undergo damage in the form of microcracks and diffuse damage was significantly impaired due to radiation sterilization as evidenced by decreased AE activity and histological observations. The results of this study suggest that, for cortical bone irradiated at 27.5 kGy, it is easier to initiate and propagate a macrocrack from a stress concentration due to the inhibition of damage formation at and near the crack tip.