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This paper studies a method of surface heat treatment by making use of grinding heat and stress to create favorable microstructures and promote high wear and fatigue resistance. It was found that the thickness of the treated surface layer could be up to 600 μm. The beneficial microstructure of the layer was created by an enhanced martensite transformation, intensive dislocations and a more desirable carbon distribution. It is highly possible that the method can be used to incorporate grinding and surface hardening into a single grinding operation to develop a cost-effective production method.