The options of a lead-cooled fast reactor (LFR) of the fourth generation (GEN-IV) reactor with the electric power of 600MW are investigated in the ELSY Project. The fuel selection, design and optimization are important steps of the project. Highly enriched Pu–U mixed oxide (MOX) fuel is cconsidered for the first core Reference fuel rods with claddings made of T91 ferrite–martensitic steel have been assessed. Based on the neutronic parameters provided by Monte–Carlo modeling with MCNP5 and ALEPH codes, simulations have been carried out to assess the long-term thermal–mechanical behaviour of the hottest fuel rods. The obtained results show that the fuel rods can withstand more than four effective full power years under the normal operation conditions without pellet–cladding mechanical interaction (PCMI). In a variant with solid fuel pellets, a mild PCMI can appear during the fifth year, however, it remains at an acceptable level up to the end of operation when the peak fuel pellet burnup 80MWd per kg of heavy metal (HM) and the maximum clad damage of about 82 displacements per atom (dpa) are reached. Annular pellets permit to delay PCMI for about 1 year.