The effect of multifunction cavitation (MFC) on the rotating bending fatigue properties of low-alloy steel rods was examined. MFC generates compressive residual stress on the surface of steel rods, in contrast to conventional water jet peening, which improves the fatigue limit of steel rods. The fatigue limit of MFC-treated steel rods can be estimated using a modified Goodman diagram. The proposed equation gives the maximum value of the fatigue limit of MFC-treated steel rods (227.7 MPa) and the maximum value of the compressive residual stress contributing to the increased fatigue limit (-117.9 MPa).