Most commonly, cracked nipples are caused by baby latching on too shallowly. When baby is able to take a large amount of breast into her mouth, the nipple ends up in the very back of baby's mouth — out of harm's way. But if your baby only takes a little bit of breast, or just your nipple, into her mouth when she nurses, then the nipple can become squashed between baby's tongue and hard palate with every suck. This is painful for you and can quickly lead to cracking and even bleeding.
It's important to look closely at how your baby is feeding. When you bring her to your breast, her head should tip back (the way you tip your head back when you drink a glass of water), and her chin should touch your breast first. If your nipple starts out above your baby's top lip, then when she tips her head back and opens her mouth, she'll get your nipple itself, plus a good amount of the breast.
Be sure to support your baby firmly behind her shoulders while she's latching, but don't hold her head. (Imagine what would happen if someone had their hand on the back of your head while you were trying to drink a big glass of water…it would be difficult for you to do.)
When your baby is latched properly, there should be no discomfort. If your nipples are already damaged, you may feel some discomfort at first because the part that's still healing will be stretched a bit, but this discomfort should ease within the first 15 to 20 seconds of the feed.
To help heal your nipples, I recommend you use hydrogel pads (such as the Ameda ComfortGel Pads) on your nipples between feedings. These gel pads provide a soothing, moist healing environment but do not leave any residue on the nipple that would interfere with your baby latching. Any cracks or damage that does not heal quickly with good positioning techniques, gentle washing while bathing or showering, and applying gel pads between feedings should be evaluated further to make sure that no infection is present. If you can't achieve comfortable positioning, then seek help from an experienced lactation consultant (IBCLC) who can help evaluate what is going wrong and find the right solution.