In order to improve the fatigue properties of SCM435H steel, a surface treatment system was developed that combines high-frequency induction heating (IH) with fine particle peening (FPP). In this IH-FPP system, a compressed air spray from the FPP nozzle rapidly cools the specimen surface, which is pre-heated by the IH system. The specimen surface can be simultaneously modified by plastic deformation and quenching. The IH-FPP process was performed at temperatures ranging from 400-750 . Vickers hardness and residual stress distributions were measured in order to examine the characteristics of the surface-modified layer created by the developed process. Surface microstructures were also observed using an optical microscope. As a result, the developed processes from 650-750 created a surface with a high hardness and an extremely fine-grained microstructure. The fine-grained microstructure was created due to dynamic recrystallization. In order to clarify the effects of the IH-FPP treatment on fatigue strength of notched SCM435H steel with a stress concentration factor of Kt = 2.36, fatigue tests were performed at room temperature using a rotational bending fatigue testing machine. The specimen treated by IH-FPP process at 700 exhibited the highest fatigue strength. This was because micro crack initiation and propagation were inhibited by the surface modified layer with high hardness and fine-grain. This result suggests that the IH-FPP treatment process is highly effective in improving the fatigue strength of steel.