Fatigue tests were conducted for circumferentially notched bars of austenitic stainless steel, JIS SUS316L, under cyclic torsion with and without static tension. For the case of cyclic torsion without static tension, the fatigue life of notched bars was found to be longer than that of smooth bars and to increase with increasing stress concentration under the same amplitude of the nominal torsional stress. This notch-strengthening effect is anomalous for the conventional fatigue design criterion. On the other hand, the fatigue life decreased with increasing stress concentration, when the static tension was superposed on cyclic torsion. To investigate the anomalous behavior, the initiation and propagation of fatigue cracks at the notch root were monitored by the direct-current electrical potential method and the compliance method. For the case of cyclic torsion without static tension, the crack propagation life increased with increasing stress concentration, while the crack initiation life decreased. The anomalous behavior of the notch effect was ascribed to the larger retardation of fatigue crack propagation by crack surface contact for sharper notches. The superposition of static tension reduced the retardation due to the smaller amount of crack surface contact, which gave rise well-known notch-weakening of the fatigue strength.