It is necessary to slot a groove on the outside of the bearing’s raceway in order to embed micro-sensor for smart bearing. Reasonable choice of slotting parameters for different type of bearings is one of key problems to be solved in smart bearing design. In this paper three-dimensional solid model and corresponding mechanics model for a segment of ball bearing’s out ring are built according to some reasonable simplification and supposition of boundary condition and loading status. Further more the influence of slotting parameters on smart bearing’s mechanical characteristics is studied with FEA method. Choosing 220 type of ball bearing as an example, theoretical analysis results of influence of slotting parameters on the maximum stress and deformation of outer ring are shown. The FEA results showed that micro-sensors for smart bearings should be manufactured flatter or the groove depth for micro-sensor embedding should be smaller soon as possible in order to insure the smart bearing’s original mechanical rigidity and strength.