Abstract The effects of the penetration rate of rolling tool on the fatigue strength and the residual stress of groove-rolled products are investigated experimentally. The products with three annular grooves of S45C commercially carbon steel and SUS304 stainless steel are rolled by a thread rolling machine with a pair of cylindrical dies at various penetration rates of rolling tool at room temperature. The formation of residual stress in groove-rolled products for various penetration rates of rolling tool is also simulated by the finite element method. It is found that the fatigue strength of the groove-rolled products rolled at higher penetration rate of rolling tool is higher than that rolled at lower penetration rate of rolling tool. It is also found that the compressive axial residual stress in the groove-rolled products rolled at higher penetration rate of rolling tool is higher than that rolled at lower penetration rate of rolling tool. The compressive axial residual stress and the strain-hardening in the groove-rolled products built up during the rolling process contribute to improve its fatigue strength.