The formation of the Zr-Cr eutectic (similar to 1320 degrees C), which does not occur in conventional Zirconium alloys, introduces a significant safety concern for Cr-coated Accident Tolerant Fuel (ATF). This study investigated the Peak Cladding Temperature (PCT) limit for Cr-coated ATF by examining the effects of the Zr-Cr eutectic on the mechanical integrity of Cr-coated Zr-1.1Nb claddings. To achieve this, Integral Loss of Coolant Accident (LOCA) tests and Ring Compression Tests (RCTs) were conducted on Cr-coated specimens under both steam and oxygen-free environments. The results indicated that while the formation of the eutectic phase between Zr and Cr does not result in structural failure, it reduced the ductility of the cladding. However, the impact of Zr-Cr eutectic on the reduction in ductility was overshadowed by the significant impact of the oxidation under the same conditions. The primary cause of the severe ductility loss in specimens oxidized above the eutectic onset temperature was the increased oxygen diffusion at elevated temperatures. Consequently, compared to specimens oxidized at 1204 degrees C, the increased oxygen concentration in the ductile layer further reduced the ductility of the cladding. Based on these findings, the pronounced reduction in ductility caused by oxidation of the Zr matrix in Cr-coated ATF cladding underscored the necessity of adhering to the current PCT limit, as long as the cladding matrix of Cr-coated ATF cladding remains Zirconium alloy. Furthermore, the excessive embrittlement observed in Zirconium alloy at temperatures above 2400 degrees F (1315 degrees C) was a key factor in establishing the current 2200 degrees F (1204 degrees C) PCT limit. As a result, extending the PCT limit beyond 1204 degrees C for Cr-coated ATF cladding is impractical, given the rapid oxygen diffusion and the consequent reduction in ductility at these higher temperatures. Therefore, maintaining the current 2200 degrees F (1204 degrees C) PCT limit for Cr-coated ATF cladding can serve as the effective approach for ensuring the safety of Cr-coated ATF cladding within the existing regulatory framework.