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The controlled rolling process has been introduced to increase strength and toughness of alloy steels for the application of transmission gear. Cr-Mo alloy steel containing 0.02% Nb was controlled rolled in the temperature range of 870-970°C, showed fine austenite grain size, about ASTM No.11, resulted from the effects of recrystallization and Nb(C,N) precipitation. To investigate the effects of grain refinement on mechanical properties, several tests were conducted for the newly developed controlled rolled steel and conventional Ni-Cr-Mo alloy steel after carburizing. The new steel showed 2.1 times higher pitting resistance than the conventional steel. Fatigue limits of new and conventional steels were 950 and 930 MPa respectively. Charpy impact energy of new steel was improved about 35% compared with the conventional steel. Consequently, the pinion gear from the new steel instead of conventional one showed enhanced performance, especially pitting resistance, in dynamometer test.