High-speed photography has been used to observe the dynamic failure of uncoated and Cr-coated transparent polycrystalline aluminum oxynitride (AlON) material, undergoing uniaxial, high-strain rate compression with a modified compression Kolsky bar technique. The high-speed photographs are correlated in time with measurements of the stresses in the specimen. In the fully transparent samples, the dynamic activation, growth, and coalescence of cracks and resulting damage zones from spatially separated internal defects have been directly observed and correlated to the macroscopic loss of the load-carrying capacity and ultimate catastrophic failure of this material. Identical experiments on the coated material only show the dynamic progressive failure on the specimen surface and do not show the origin of the failure images at the internal defects.