Edge cracking is commonly observed in cold rolling process. However, its failure mechanism is far from fully understanding due to the complex stresses and plastic flow conditions of steel strip under the rolling condition. In this paper, an extended Gurson–Tvergaard–Needleman (GTN) damage model coupled with Nahshon–Hutchinson shear damage mechanism was introduced to investigate the damage and fracture behavior of steel strip in cold rolling. The results show that extended GTN damage model is efficient in predicting the occurrence of edge crack in cold rolling, and the prediction is more accurate than that of the original GTN damage model. The edge cracking behavior under various cold rolling process parameters is investigated. It comes to the conclusion that edge crack extension increases with the increase of the reduction ratio, tension and the decrease of the roller radius and friction coefficient. The influence of shear damage becomes more significant in rolling condition with a larger reduction ratio, smaller roller radius, lower friction force, and tension.