A three-dimensional finite element heat transfer model incorporating a moving heat source was developed to investigate the heat transfer mechanism in grinding-hardening of a cylindrical component. The model was applied to analyze the grinding-hardening of quenchable steel 1045 by two grinding methods, traverse and plunge grinding. It was found that the heat generated can promote the martensitic phase transformation in the ground workpiece. As a result, a hardened layer with a uniform thickness can be produced by traverse grinding. However, the layer thickness generated by plunge grinding varies circumferentially. The results are in good agreement with the experimental observations.