In the welded joints, fatigue failures typically originate from defects or notch-like geometries under cyclic loading. This study investigates the impact of stress relief grooves (SRG) on the fatigue performance of butt-welded cast steel to ultra-high-strength steel components using experimental fatigue tests and finite element method. The experiments examined the fatigue properties of hybrid joints between G26CrMo4 cast steel (t = 20 mm) and S960 steel plate (t = 6 mm) with and without SRG. Gas metal arc welding process was used to weld the butt joints that had a permanent root backing machined on the cast steel part, causing a crack-like defect to the weld root. Additionally, the top surfaces of the welded parts were aligned, resulting in a significant axial misalignment in the butt joint. The SRG, positioned close to the weld root, was found to have a beneficial influence on the joint’s fatigue performance by a factor of 1.2 when using the nominal stress criterion. However, the fatigue capacity was still roughly 35% lower compared to the symmetrical equivalent due to the secondary bending stress, caused by axial misalignment. The finite element analyses indicated that the SRG reduces the amount of secondary stresses at the weld root leading to lower total structural stress. The study recommends using the FAT80 (m = 3) design curve in the structural stress method, for similar butt-welds having a crack-like defect, parallel to the loading direction, at the weld root. However, for welded joints with crack-like defects, it is advisable to use linear elastic fracture mechanics rather than relying solely on stress-based local approaches.