By studying the topography of crazes and shear deformation zones in polymer films with the Atomic Force Microscope (AFM), it was found that crazes and shear deformation zones grew by a micro-necking process. This discovery indicates that when a glassy polymer undergoes local deformations, the material drawn into the deformation zones continues to be deformed until a much later time than that previously understood. Details of the craze micro-necking mechanism and its important implications will be discussed. Based on the necking mechanics, it was shown that craze initiation and growth can be examined using a modified Considere construction, and the stress distribution within a micro-deformation zone was investigated by assuming the Bridgman's theory. The results of the stress analysis are in excellent agreement with the breakdown behavior of crazes observed experimentally. The Young's moduli of the crazed and sheared polymers within the tiny deformation zones were also measured using a simple new AFM technique. Evidence of strain softening was clearly observed in that both the Young's moduli of crazes and shear deformation zones were very low compared to that in the bulk.