A new hybrid surface-integral-finite-element numerical scheme has been developed to model a three-dimensional crack propagating through a thin, multi-layered coating. The finite element method was used to model the physical state of the coating (far field), and the surface integral method was used to model the fatigue crack growth. The two formulations are coupled through the need to satisfy boundary conditions on the crack surface and the external boundary. The coupling is sufficiently weak that the surface integral mesh of the crack surface and the finite element mesh of the uncracked volume can be set up independently. Thus when modeling crack growth, the finite element mesh can remain fixed for the duration of the simulation as the crack mesh is advanced. This method was implemented to evaluate the feasibility of fabricating a structural health monitoring system for real-time detection of surface cracks propagating in engine components. In this work, the authors formulate the hybrid surface-integral-finite-element method and discuss the mechanical issues of implementing a structural health monitoring system in an aircraft engine environment.