Interlayer systems have been incorporated into hot-mix asphalt (HMA) overlays to reduce reflective cracking development. This paper describes an investigation of the reflective cracking mechanism and the ability of steel reinforcement netting interlayer to retard reflective cracking due to vehicular loading utilizing three-dimensional finite element method and the ABAQUS cohesive zone model. For HMA overlay that consists of wearing surface and leveling binder, it was found that reflective cracking occurs under the wheel path and at the lower one third of the leveling binder layer and propagates transversely. The study found that steel reinforcement netting placed between the HMA overlay and existing PCC pavement delays reflective crack initiation time by seven folds. Also, the rate of fractured area by reflective cracking in the reinforced overlay is 4.7 times lower than that of the unreinforced overlay. This study concludes that steel reinforcement netting is an efficient interlayer system to delay the initiation and propagation of reflective cracking given that it is properly installed.