The present study analyzes the impulse vibration transmission through the deep groove ball bearing systems caused by a localized surface defect on the bearing raceways. The analysis is performed to understand the use of vibration signal in rotating machines for condition monitoring and diagnostics. A new dynamic model of a deep groove ball bearing system that accounts for the contact stiffness between the outer race and housing, and includes the effect of a localized defect on raceways is formulated in this study. This model is applied to examine the effect of housing materials on the contact stiffness between the outer race and housing, and the vibration transmission characteristics through the ball bearing systems. A series of parametric studies is also performed to understand the relationships between the material properties, the outer race-housing contact stiffness, and ball bearing vibration response, and as well as the vibration transmission characteristics of the impulse caused by the defects with different sizes. The numerical results demonstrate that the proposed model provides a way for simulating vibration transmissibility characteristics through the ball bearing systems, which was previously not possible. An experimental investigation is also presented to validate the proposed model.