Fatigue limit estimation based on dissipated energy measurement was applied to the evaluation of shot peening effect on fatigue limit improvement. It was found that estimated fatigue limit based on dissipated energy for the shot peened material showed conservative value, compared with that obtained by conventional fatigue tests. In the constant stress amplitude fatigue test, dissipated energy for unbroken specimens with shot peening treatment was larger than that for broken as-received specimen. SEM observation for unbroken specimens with shot peening treatment showed that some micro cracks existed inside of dents. These facts indicated that dissipated energy caused by structure change leading to crack initiation was observed at stress amplitude above the estimated fatigue limit for unbroken specimens with shot peening treatment, however crack propagation was inhibited by compressive residual stress field around initiated micro cracks. Therefore, it was considered that fatigue limit estimated by dissipated energy measurement indicated crack initiation limit in total fatigue life.