We have proposed a new cold processing method to enlarge the diameter of a short section of a metal shaft using a combination of a cyclic bending load and an axial compressive load that is lower than the yield stress of the sample material. We call this cold processing method the diameter-enlargement working method, and refer to the enlarged section of the processed shaft as the diameter-enlargement section. The processing method easily produces large plastic deformation in the processed section under a low axial compressive load at room temperature. However, a crack is sometimes generated in the stepped section during processing. Therefore, we conducted processing experiments to clarify the crack generation conditions, and simulated the working process using the finite element method to investigate the behaviors of stress and strain during processing. Based on the experiments and analyses, we determined that a fatigue crack is generated because of cyclic axial normal stress in the root of stepped section at the axial-compressive loading side. The experimental and analytical fatigue strength was well described by the Coffin-Manson expression.