The effects of hydride morphology on the axial fracture toughness of cold-worked Zr - 2.5 wt\% Nb pressure tube material have been determined at room temperature and $240\,^\circ\!C$. To obtain various hydride morphology, specimens containing 50, 120 and 200 ppm hydrogen were cooled at three different rates: Water-quenching, air-cooling and furnace-cooling. The hydride morphology was observed with optical microscope. The crack extension during fracture toughness testing was measured using direct current potential drop method. Fracture toughness characterized by maximum load toughness, J-R curve and initial slope of the J-R curve was discussed with the hydride morphology. As cooling rate increased, the hydride distribution was varied from uniform and continuous to irregular and discrete, and the hydride size and interhydride spacing decreased. The influence of hydrogen concentration was to increase the hydride size and interhydride spacing. In the case of air-cooling, the variation of hydride orientation was due to residual stress produced during rapid cooling. Materials with closely spaced and large hydrides exhibited very low toughness at room temperature due to insufficient matrix material to blunt a crack travelling between the hydride platelets and little or no plastic deformation necessary to fracture large hydrides. The increase in fracture toughness of the water-quenched with 50 ppm hydrogen and tested at room temperature was due to dispersion hardening by small intragranular $\alpha$ hydride. The upper shelf toughness level and increase in the slope of the J-R curves at $240\,^\circ\!C$ were resulted from a loss of triaxial constriaint at the crack tip with increasing temperature, because of increasing plasticity corresponding to a reduction in flow stress, which made it difficult to sustain stress large enough to crack individual hydrides.