This paper deals with an evaluation of the residual stress due to shot peening induced in a carburized gear tooth and its application to the fatigue crack propagation problem. A practical method is proposed on the basis of the assumption that the residual stress is caused by the difference of volume expansion in the case and the core, and the influence of both the reduction of retained austenite and the strain due to shot peening are considered. The evaluated residual stress is close to the measured stress, though the surface stress is rather overestimated. The stress intensity factor is computed by the influence function method, and it is shown that the factor is decreased by the residual stress in shot peened gear tooth. The shot peening is fairly effective to the reduction of fatigue crack growth rate. The crack propagation is simulated and the resistance due to shot peening is quantitatively demonstrated and discussed.