We examined the microcracking (damage) in the vicinity of a circular hole in bovine femoral bone specimens. The stresses near the hole were derived by a finite element analysis model using the bone’s elastic constants and yield stresses, which were determined from a series of mechanical tests specifically for the type of bone under examination. The spatial occurrence and distribution of microcracking was compared to the patterns of the predicted maximum principal stress, the von Mises stress, and the strain energy density function (all implicated by various workers as stimuli for bone remodelling) and to the predictions derived by the use of two engineering criteria for anisotropic yield under mixed mode of stress. The predictions for stresses and the strain energy density were all very similar, making it impossible to claim that any of them is superior to the others. However, empirical examination of the results of the Hencky-von Mises and Tsai-Wu anisotropic yield criteria showed that the Tsai-Wu criterion approximated reasonably the pattern of microcracking around the hole. We suggest that, in the light of the considerable damage observed in the vicinity of stress concentrators, similar damage in irregular material interfaces (i.e. near orthopaedic implants) would require the re-examination of the theories concerning bone remodelling so as to account for the possibility of occurrence of damage and the quantification of its magnitude and likely effect. The presence of considerable microdamage in bone long before it fails suggests that damage-based criteria are more likely to be successful predictors of bone remodelling behaviour than would stress or strain-based criteria.