The effects of grain size on the fatigue life and crack initiation mechanism of 316LN stainless steel (SS) in 320 °C water environment were investigated by corrosion fatigue cracking test system, scanning electron microscopy (SEM), electron backscatter diffraction technique (EBSD), and transmission electron microscopy (TEM). The grain sizes of the specimens were controlled to be 30, 80, and 210 µm, respectively, by different solution treatments. The experimental results indicated that the specimens with fine grains own the longest fatigue lives than those with intermediate and coarse grains. The fatigue stress amplitudes of the specimens increased with the grain refinement, although the fatigue lives of the specimens with intermediate and coarse grains were similar. The improvement of fatigue life for the specimens with fine grains was attributed to the decreasing of the crack initiation induced by refined crystalline strengthening. Moreover, the dislocation structures of the specimens with fine grains consisted of walls and cells. While planar slip bands were found in the specimens with intermediate and coarse grains.