In this paper, the influence of transverse cracks in a rotating shaft is analyzed. The paper addresses the two distinct issues of the changes in modal properties and the influence of crack breathing on dynamic response during operation. Moreover, the evolution of the orbit of a cracked rotor near half of the first resonance frequency is investigated. The results provide a possible basis for an on-line monitoring system. In order to conduct this study, the dynamic response of a rotor with a breathing crack is evaluated by using the Alternate Frequency/Time Domain approach. It is shown that this method evaluates the non-linear behaviour of the rotor system rapidly and efficiently by modeling the breathing crack with a truncated Fourier series. The dynamic response obtained by applying this method is compared with that evaluated through numerical integration. The resulting orbit during transient operation is presented and some distinguishing features of a cracked rotor are examined.