Deformed microstructure and rolling contact fatigue (RCF) cracks are the two predominant damage characteristics of the field wheel and rail materials from the cross-sectional view. The proportion of two damage characteristics varied under different operating conditions. Thus, this study aims to investigate the correlation between material deformed microstructure and RCF crack propagation of U71Mn rail when matching with CL60 wheel using a twin-disc testing machine. An initial deformed microstructure layer on U71Mn rail material was first obtained by testing under dry condition, and then the RCF crack propagation tests were conducted under water condition. Results indicated that when the crack depth was smaller than the initial deformed microstructure layer depth, the deformed orientation dominated the crack propagation direction; when the depth of crack propagation towards the matrix exceeded the depth of newly formed deformed microstructure region, crack propagation direction dominated the microstructure deformed orientation. The increase in the initial deformed microstructure layer depth would intensify both the crack length and depth, and also would result in thicker newly formed deformed microstructure region. The Pearson correlation coefficient between initial deformed microstructure layer depth and crack depth was 0.998. The influence of initial deformed microstructure layer depth on wear rate was slightly greater than crack depth.