The effect of processing layer on fatigue property of extruded AZ61 magnesium alloy was investigated. Rotating bending fatigue strength test, micro structure observation, micro-hardness test, and observation of crack initiation and crack growth behavior during fatigue test were carried out. It is found that specimens which has processing layer by cutting (PL) exhibited significantly longer fatigue life compared with specimens without processing layer (PL-P). Fatigue life of PL was 10 to 50 times longer than that of PL-P. In case of PL, hardness increased in the region near by the surface region. According to the result of observation of crack initiation behavior by using replica method, crack initiation resistance of PL was higher than that of PL-P.