Fatigue cracks may appear in horizontal rotating machinery due to periodic stresses imposed to its shaft. The investigation of stability behavior of cracked rotors can lead to proper diagnosis of machinery and to prevent possible accidents caused by the rotor failure. In this study, the dynamic stability of a rotor with a transverse crack is investigated. Models of both open and breathing cracks are developed and then used in the model of a cracked Jeffcot (de Laval) rotor. The stability of rotor motion equations represented by differential equations with periodic coefficients is investigated using Floquet theory. While both crack models show instability regions around the first un-damped frequency, sub-harmonic regions are predicted by the breathing crack models. Compared to perturbation methods frequently used to determine the stability regions, the transition matrix approach used in this study can be applied to complex models of rotors and consequently may help in the identification of cracks in rotating machinery.