The microstructural changes in Ni/YSZ anode substrate and crack formation during Ni oxidation were investigated. The composition of as-sintered anodes was 56 wt% NiO+44 wt% YSZ and that of electrolyte was 8 mol% yttria. After complete reduction, specimens were oxidized in $N_2$ + air at $600sim800^{circ}C$. Oxygen partial pressure was controlled in between 0.05 atm and 0.2 atm $O_2$. When the anode was oxidized, at higher than $690^{circ}C$, three layers were formed in the specimens. The first was fully oxidized layer(NiO/YSZ), the second was a mixed layer and the third, near-intact layer. Under $640^{circ}C$ such distinctive layers were not observed. Cracks formed at electrolyte layer when weight gain attained at $65sim75%$ of the total gain due to complete oxidation despite of different oxidation temperature and oxygen partial pressure.