Shattered rim cracking, propagation of a subsurface crack parallel to the tread surface, is one of the dominant railroad wheel failure types observed in North America. This crack initiation and propagation life depends on several factors, such as wheel rim thickness, wheel load, residual stresses in the rim, and the size and location of material defects in the rim. This article investigates the effect of the above-mentioned parameters on shattered rim cracking, using finite element analysis and fracture mechanics. This cracking is modelled using a three-dimensional, multiresolution, elastic–plastic finite element model of a railroad wheel. Material defects are modelled as mathematically sharp cracks. Rolling contact loading is simulated by applying the wheel load on the tread surface over a Hertzian contact area. The equivalent stress intensity factor ranges at the subsurface crack tips are estimated using uni-modal stress intensity factors obtained from the finite element analysis and a mixed-mode crack growth model. The residual stress and wheel wear effects are also included in modelling shattered rim cracking. The analysis results show that the sensitive depth below the tread surface for shattered rim cracking ranges from 19.05 to 22.23 mm, which is in good agreement with field observations. The relationship of the equivalent stress intensity factor (Δ K eq) at the crack tip to the load magnitude is observed to be approximately linear. The analysis results show that the equivalent stress intensity factor (Δ K eq) at the crack tip depends significantly on the residual stress state in the wheel. Consideration of as-manufactured residual stresses decreases the Δ K eq at the crack tip by about 40 per cent compared to that of no residual stress state, whereas consideration of service-induced residual stresses increases the Δ K eq at the crack tip by about 50 per cent compared to that of as-manufactured residual stress state. In summary, the methodology developed in this article can help to predict whether a shattered rim crack will propagate for a given set of parameters, such as load magnitude, rim thickness, crack size, crack location, and residual stress state.