The fracture toughness of thin metal films confined between elastic layers, a geometry prevalent in electronic packaging applications, is found to depend strongly on the metal film thickness and on residual stress. Here, a two-dimensional discrete dislocation ( DD) model is used to predict the dependence of fracture toughness on both residual stress and film thickness. The fracture toughness is found to be nearly independent of cohesive strength once the cohesive strength exceeds similar to 900 MPa, and predictions for systems with nearly zero residual stress agree well with experiments. The fracture toughness is found to decrease significantly with increasing residual stress, and again the predictions are in qualitative agreement with experiments. The DD model predicts that the effect of residual stresses is independent of the sign of the stress, tension versus compression, in contrast to continuum plasticity models. Overall, this study demonstrates the power of dislocation-based modelling to handle multiple scale-dependent plasticity phenomena simultaneously.