Induction hardening of mild steel components often results in significant improvements in the static and cyclic load capability, with comparatively small increases in cost. Members subjected primarily to torsional loading are a relevant subset of the broad range of induction hardened components. Due to the variation of material properties and residual stresses, failures are “initiated” at the traditional geometric locations predicted for homogeneous materials and also at subsurface sites. The introduction of shear based fatigue parameters has necessitated the consideration of the residual stress as a three dimensional quantity, especially when analyzing subsurface failures. Not considering the tensoral nature of the residual stress can lead to serious errors when estimating fatigue life, and for larger magnitude loadings, the residual stress field may relax. An incremental plasticity model based on the concepts of Armstrong-Frederick / Chaboche / Ohno-Wang is utilized to determine the residual stress relaxation and “stable” cyclic deformation of an induction hardened circular bar subjected to torsional loading. In conjunction with the deformation analysis, a Findley stress based shear type parameter and a traditional uniaxial approach, the Smith-Watson-Topper, are utilized to predict both fatigue life and failure location. Finally, the predictions are compared to experimental observations. The shear based or mixed mode damage analysis provided the most consistent life estimates.