Damage often occurs on the surface of railway wheels due to wheel-rail contact fatigue. Since the wheel failure can cause derailment causing the loss of life and property, it should be removed prior to the wheel failure. The effect of surface removal on contact fatigue life has been investigated by many researchers, however, the effects of residual stress and traction force have not been reported yet. The railway wheel reserves the initial residual stress due to the manufacturing process, and this residual stress is changed by the thermal stress induced by braking. Also, the traction force is usually applied along with residual stress on wheels of locomotive and electric motor vehicle. In this study, the effect of surface removal on the contact fatigue life for a railway wheel has been evaluated by applying the rolling contact fatigue test. Also, the effect of traction force and change of residual stress on the contact fatigue life has been estimated by applying finite element analysis. It is found that the residual stress is a dominant factor determining the surface removal depth as far as the traction coefficient is less than 0.15. If the traction coefficient is greater than 0.2, however, the surface removal depth is observed to be independent on the residual stress.