In this study, multifunction cavitation (MFC) was performed on low-alloy steel (AISI 4140 steel) rods with different hardnesses to increase their fatigue limit. It was found that a high compressive residual stress was generated on the surface of steel rods by MFC and that the magnitude of the compressive residual stress tended to increase with increasing specimen hardness, which resulted in a higher fatigue limit. However, fatigue cracks are known to be initiated from the pits and red rust that form on the surface during MFC treatment in water. Furthermore, relaxation of the compressive residual stress was also investigated during the fatigue test to elucidate the mechanism for improving the fatigue properties. The results showed that the fatigue limit for MFC-treated steel rods was accurately estimated by considering residual stress relaxation, hardness, and pit formation. Validation of the fatigue limit estimation was also conducted through comparison with Murakami's equation.