This research deals with a teeth failure of a gear shaft that served as a part of shipyard crane drive train. Almost all of the teeth of a spiral bevel gear, part of a larger shaft, fractured during normal operation of the crane. Failure analysis combined experimental and numerical research. Visual inspection was employed to determine the fracture location and crack propagation paths. Microscopy, optical and scanning electron (SEM), was used to inspect damaged surfaces of the teeth, reveal possible flaws and fine microstructure of the material. Type of steel used for manufacturing was determined based on chemical composition of the material obtained using optical emission spectrometer with glow discharge source (GDS) sample stimulation. Further, tensile specimens were extracted from the shaft to test the strength of the steel. Additionally, hardness test was performed. All experimental research suggest it is a case of gear teeth spalling, probably caused by excessive contact stresses. To gain better understanding of the failure process, a 3D numerical model of the gear shaft was built and finite element (FE) stress analysis performed. Analysis showed excessive contact stresses at the teeth contact area. Time-varying meshing stiffness (TVMS), an important gear health condition parameter, is determined via FE procedure for several examples of healthy to gradually damaged gear. Obtained results show how spall propagation influences TVMS and, thus, affects gear performance leading to potential failure.