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In the hard steel investigated the tensile residual stress sensitivity of the fatigue strength approaches its mean stress sensitivity. Hence, fatigue limit and finite fatigue life are strongly reduced with increasing tensile residual stresses. In the range of compressive residual stresses, complex relationships exist which depend on the relationships between residual stress gradient and loading stress gradient. In smooth specimens or components where the residual stress gradient is steeper than the loading stress gradient, cracks initiate below the surface, and the effect of compressive residual stresses on the fatigue limit is small. Contrarily the fatigue strength of notched specimens with a high loading stress gradient is strongly enhanced by high compressive residual stresses with a large penetration depth.