The fatigue strength of a high V alloyed powder metallurgy tool steel with two different inclusion size levels, tempered at different temperatures, was investigated by a series of high cycle fatigue tests. It was shown that brittle inclusions with large sizes above 30 mu m prompted the occurrence of subsurface crack initiation and the reduction in fatigue strength. The fracture toughness and the stress amplitude both exerted a significant influence on the fish-eye size. A larger fish-eye area would form in the sample with a higher fracture toughness subjected to a lower stress amplitude. The stress intensity factor of the inclusion was found to lie above a typical value of the threshold stress intensity factor of 4 MPa.m(1/2). The fracture toughness of the sample with a hardness above HRC 56 could be estimated by the mean value of the stress intensity factor of the fish-eye. According to fractographic evaluation, the critical inclusion size can be calculated by linear fracture mechanics.