Ground white layer is caused primarily by grinding temperature induced phase transformation. So, it may form when grinding temperature exceeds the nominal phase transformation temperature. However, no attempt is made to investigate mechanical effect on formation of white layer. In this study, grinding temperature is measured by using thermocouple technique in grinding of AISI 52100 annealed steel. The specimens are investigated by using scanning electron microscope (SEM), energy disperse spectroscopy (EDS), micro hardness tester and X-ray diffraction (XRD). The microstructure and formation mechanism of white layer are analyzed. Ground whiter layer is confirmed to be composed of fine-grained cryptocrystalline martensite and retained austenite. High hardness of white layer is caused by transformation hardening through fine grain and high dislocation density due to severe deformation. White layer can form at temperatures below the nominal austenitization temperature of the material. Plastic deformation is also important in white layer formation during grinding process. High pressure on grinding surface exists under severe deformation. Phase temperature can be reduced due to high pressure; while crystal grain can be refined by plastic deformation. Oxidation and carburizing phenomenon exist during formation of white layer.