We analyze the effect of defects on the polarization stability and switching of epitaxial nanocapacitor ferroelectric films on tensile substrates using a thermodynamic approach. Defects are either frozen-in dipoles of the p-type or trapped space charges. The retention of the in-plane ferroelectric polarization does not suffer nearly at all from the possible presence of dead layers or polar defects but is dramatically impacted by relatively high densities of space charge. Switching is a strong function of defects as well as the presence of a bottom electrode. The out-of-plane dielectric displacement exhibits a spike during switching of the in-plane polarization in films with bottom electrodes but nearly disappears otherwise. Such an effect during polarization reorientation along the film plane could be tailored as a sensing signal. The hysteresis and domain characteristics as a function of interface conditions and defects are discussed for BaTiO3 strained on tensile substrates. (C) 2011 Elsevier Ltd. All rights reserved.