olling Contact Fatigue (RCF) is very high-cycle fatigue process, leading to the formation of so-called butterfly cracks around non-metallic inclusions. The purpose of this study is to describe the crack initiation and microstructural changes around butterfly cracks in the hardened and tempered bearing steel with artificially introduced Al2O3 inclusions. This paper presents results from investigations using state-of-art electron imaging techniques such as Transmission Electron Microscopy (TEM), Electron Backscattered Diffraction (EBSD) and Focused Ion Beam (FIB). EBSD measurements showed high level of local grain mis-orientation at Al2O3/steel matrix interface which suggests possible locations for microcracks initiation. The TEM samples, containing the cracks, were selected from specific locations using precise FIB preparation process, allowing the TEM analyses of the large microstructural changes between the butterfly crack (formation of ultra fine nano-crystalline ferrite) and the steel matrix (tempered martensite). It was found that the butterfly crack growth and microstructural changes (formation of nano-crystalline ferrite) are simultaneous processes as a result of low-temperature recrystallization@en