Display omitted •The mechanism of residual stress relaxation in carburized steel was elucidated.•The compressive residual stress relaxation was attributed to compressive yielding.•The fatigue limit was estimated considering residual stress relaxation.•The compressive residual stress contributing to increased fatigue limit was revealed. The mechanism of residual stress relaxation for carburized steels was elucidated and their fatigue limit was estimated. The compressive residual stress in the carburized steel after rotating bending fatigue tests is mainly influenced by the relaxation during the compressive loading phase, although it increases at the early stage. The fatigue limit of carburized steels can be estimated according to the modified Goodman diagram considering the residual stress relaxation. The proposed equation shows the maximum value of the fatigue limit (1013 MPa) of carburized steel and the maximum value of the compressive residual stress contributing to the increased fatigue limit.