In this investigation, a three-dimensional (3D) finite element (FE) model was developed to study subsurface initiated spalling observed in rolling line contact of tribo components such as bearings. An elastic–kinematic hardening–plastic material model is employed to capture the material behavior of bearing steel and is coupled with the continuum damage mechanics (CDM) approach to capture the material degradation due to fatigue. The fatigue damage model employs both stress and accumulated plastic strain based damage evolution laws for fatigue failure initiation and propagation. Failure is modeled by mesh partitioning along unstructured, nonplanar, intergranular paths of the microstructure topology represented by randomly generated Voronoi tessellations. The elastic–plastic model coupled with CDM was used to predict both ratcheting behavior and fatigue damage in heavily loaded contacts. Fatigue damage induced due to the accumulated plastic strains around broken intergranular joints drive the majority of the crack propagation stage, resulting in a lower percentage of life spent in propagation. The 3D FE model was used to determine fatigue life at different contact pressures ranging from 2 to 4.5 GPa for 33 different randomly generated microstructure topology models. The effect of change in contact pressure due to subsurface damage and plastic strain accumulation was also captured by explicitly modeling the rolling contact geometry and the results were compared to those generated assuming a Hertzian pressure profile. The spall shape, fatigue lives, and their dispersion characterized by Weibull slopes obtained from the model correlate well with the previously published experimental results.