Defect in surface induction hardening layer at the eccentric axle neck of C38N2 automobile engine crankshaft was investigated. Fracture morphology and microstructure of the defect were analyzed by optical microscope and scanning electron microscope, and compared with the microstructure characteristics in defect-free locations. And the reasons and the technical procedures of the defects were discussed. The results indicated that the surface defect is a quenching crack caused by induction hardening process. The crack propagation is along prior-austenite grain boundaries and is affected by MnS inclusions. Martensite lath in surface hardening layer at position having 45° or 90° with mouldjoint is shorter than that at the defect position. Distribution characteristics of inclusions at different positions have significant difference. Inclusions in the defect position are slender spindle and are distributed nearly vertical the crankshaft surface. Distribution of the inclusions in the 45° position is approximately parallel to the crankshaft surface. And the inclusions in the 90° position are mostly graininess. Distributional difference of the inclusions at the different positions is related to uneven flowing of metal during stamp forging process.