The objective is to analyze the fracture of output shaft in the two speed gearbox, which was broken after one year service. By means of software KISSsoft and KISSsys, a strength calculation has been carried out on the transmission system, which shows that the output shaft was designed properly and it should be able to withstand the loads applied. The metallurgical microstructure inspection and SEM observation have been conducted to seek the failure reason. Lots of silicate inclusions in the fracture origin have been found out by SEM observation, which cause the initiation of shaft failure most probably. Obvious dendritic segregation in the center area of the fracture surface, intercrystalline fracture, cleavage fracture and unreasonable metallurgical microstructure show the evidence that the forging process and the heat treatment on the output shaft are not qualified, which can contribute to the initiation and spread of shaft fracture.