In recent years, fatigue limit estimation based on energy dissipation has been getting considerable attentions. In this method, temperature change due to irreversible energy dissipation is measured by infrared thermography for various levels of stress amplitude. It is known that the dissipated energy increases with increasing stress levels, and a certain stress level where the change in dissipated energy shows sharp increase coincides with fatigue limit. However, cause and effect relationship between energy dissipating mechanism and fatigue damage has not been investigated well. In this study, effect of phase transformation on fatigue limit estimation based on dissipated energy is investigated for austenitic stainless steel. Fatigue limit estimation based on dissipated energy and conventional fatigue test were conducted for JIS type 304 and type 316L austenitic stainless steel. It was found from experimental studies that fatigue limit of 316L stainless steel obtained from dissipated energy coincided with that by conventional fatigue test; on the other hand fatigue limit of type 304 stainless steel estimated by dissipated energy measurement gave conservative value compared with that by conventional fatigue test. In the case of type 304 stainless steel, plastic deformation led to a phase transformation from austenite into martensite. As the result, amount of emitted dissipated energy decreased since some amount of irreversible plastic strain energy was consumed for phase transformation, and this affected on the fatigue limit estimation based on energy dissipation.