In this study, the effects of retained austenite (RA) and residual stress on rolling contact fatigue (RCF) of carburized AISI 8620 steel were investigated through modeling and experiments. In modeling, a two-dimensional finite element RCF model was developed to examine the crack propagation and fatigue life of carburized AISI 8620 steel. An extended finite element method (XFEM) was used to initiate and propagate the cracks in the model. A Voronoi tessellation was randomly generated to simulate the randomness of the microstructures in steel. The cracks were initiated on the grain boundaries of a Voronoi cell prior to the simulations at different locations in the RCF model. The RCF life of the samples was determined by rolling contact fatigue tests. The results in both simulations and experiments showed that the higher level of RA and compressive residual stress achieved improved RCF life through mitigation of crack propagation. The effect of increased RA led to significant improvement on RCF life as compared to increased in compressive residual stress.