In this study, SCM440 steel specimens with different surface morphology and hardness were prepared by shot peening and fine particle peening, followed by induction hardening and tempering at different temperatures. Rotating bending fatigue tests were performed for these specimens, and the combined effects of the surface dent formed by peening and residual stress on the fatigue limit of the induction hardened steels were quantitatively investigated. It was found that the fatigue limit of the induction hardened steel tended to decrease with an increase in the size of the particles used in the peening. The parameter of surface morphology that showed a good correlation with the fatigue limit of the induction hardened steel was the waviness parameter, but not the roughness parameter. Furthermore, a fatigue limit estimation for induction hardened steels with different surface morphology was described. The improvement in the fatigue limit of steels with surface dents due to compressive residual stress was more significant as the hardness decreased, and the maximum fatigue limit improved by compressive residual stresses increased as the size of surface dents decreased.