Low alloy steels were subjected to peening with fine iron sulfide particles (FeS-peening) under ambient conditions to transfer a layer of such particles, which can improve seizure resistance and sliding properties, and thus enhance the fatigue characteristics of the steel. This process was performed without the use of aqueous Na2S2O3 and the specimens were assessed using electron probe microanalysis and rotating bending fatigue tests. Treated specimens exhibited higher fatigue limits as a result of high degree of compressive residual stress generated on the steel surface. The effects of residual stress on the fatigue limit were quantitatively investigated using a modified Goodman diagram. Sample cross-sections were observed using electron backscattered diffraction, which confirmed that FeS-peening formed fine surface grains. Grain refinement was determined to be at least partly responsible for the improved fatigue properties of the steel following FeS-peening.