In this study, the effect of shot peening parameters on fatigue strength of steel manufactured by powder metallurgy (PM) was investigated. Steel material obtained from Hoganas ASC 100.29 in chemical composition of Fe-0.5% C-2% Cu was produced by using a single action press PM process. To determine the effect of shot peening parameters on fatigue performance, fatigue tests were performed on 20 unpeened and 80 shot-peened samples, which were machined from sintered steel. Furthermore, shot-peened samples were peened at different peening intensities, 100% and 200% saturation and full coverage conditions. Fatigue performance of steel, produced by PM process, was improved by surface peening process. For the studied PM steel, the best fatigue performance was obtained with the samples that were shot peened at 20Almen intensity and 100% saturation. Fatigue strength and limit of the samples, however, were reduced after a certain cold work level. Higher intensity and saturation levels of peening process thus deteriorated the beneficial effect on fatigue strength and limit.