Misalignment of gear shafts, due to manufacturing and assembly errors, has an adverse influence on gear tooth stresses, load sharing and smooth transmission. In practice, gear tooth modifications, such as crowning, are often resorted to. In this work, investigations of simultaneous effect of both misalignment and crowning on transmission error and mesh stiffness variation have been carried out. Necessary three-dimensional model is created using in-house developed code for generation of involute and trochoidal profiles. The three-dimensional stress analysis is carried out using general purpose FEM software ANSYS 12 for contact stresses. The effect of misalignment on the contact stress for different angular rotations during meshing cycle is analysed. A method to obtain contact stress pattern on the basis of a threshold value is proposed in this work. Mesh stiffness, load sharing ratio and transmission error are also evaluated over a complete mesh cycle. The results for uncrowned and crowned spur gear with misalignment errors are compared and discussed in this paper.