The flow theory of mechanism-based strain gradient (MSG) plasticity is established in this paper following the same multiscale, hierarchical framework for the deformation theory of MSG plasticity in order to connect with the Taylor model in dislocation mechanics. We have used the flow theory of MSG plasticity to study micro-indentation hardness experiments. The difference between deformation and flow theories is vanishingly small, and both agree well with experimental hardness data. We have also used the flow theory of MSG plasticity to investigate stress fields around a stationary mode-I crack tip as well as around a steady state, quasi-statically growing crack tip. At a distance to crack tip much larger than dislocation spacings such that continuum plasticity still applies, the stress level around a stationary crack tip in MSG plasticity is significantly higher than that in classical plasticity. The same conclusion is also established for a steady state, quasi-statically growing crack tip, though only the flow theory can be used because of unloading during crack propagation. This significant stress increase due to strain gradient effect provides a means to explain the experimentally observed cleavage fracture in ductile materials [J. Mater. Res. 9 (1994) 1734; Scripta Metall. Mater. 31 (1994) 1037; Interface Sci. 3 (1996) 169].