Induction surface hardening is widely used to enhance local strength and hardness. However, most research is only to have a focus on fatigue life and fatigue behavior is not so much studied. So, in this study, Cr-Mo steel alloy(SCM440) was used to show the effect of residual stress and micro hole on the fatigue strength fur base metal and induction surface hardened specimen. In addition, the fatigue characteristic between surface hardened and fully hardened steel is somewhat different. It is caused by hardness distribution, residual stress and inclusions etc.. The modification of prediction equation of fatigue strength is proposed and predicted results show very good accuracy. A $textsc{k}$, which is calculated 1.46, is introduced to consider the effect of stationary crack with defect. A new method of modifying residual stress is proposed to examine the mean stress effect under fatigue loading.