Finite element modeling of elasto-plastic rolling and sliding contact will be extended to the near-surface region so that it can include surface damage due to repeated loading of individual asperities and surface irregularities. These irregularities produce intense spikes in the pressure distribution and result in cyclic plasticity and fatigue damage very close to the contact surface. The effects are not addressed by conventional Hertzian theory for smooth contact surfaces and become determining factors in the failure of rolling elements made from advanced materials. The modeling of the effects of irregularities will be extended to also study their effects on bodies with shallow modified surface layers and coatings in order to determine which properties and dimensions of these layers give optimal rolling element performance.