The working state of equipments such as wind turbines, cranes, and excavators is directly affected by the damage of the slewing bearing. Condition monitoring system is a good method to identify the defects; however, the measuring range and distribution of the sensors have important influence on the monitoring efficacy. Due to the thin-wall and cyclic structure characteristics of a slewing bearing, the defect characteristic response is unusual and unknown. To solve this problem, a finite element model for local defect on the raceway of a slewing bearing was established by ABAQUS, and the operating process of the slewing bearing was simulated based on the explicit dynamic finite element algorithm. The pulse waveforms of vibration responses under different defect sizes are obtained, and the influencing mechanism of the damage sizes on the slewing bearing was studied. The simulation results show that the increase in defect length is the dominant influence on the operation of a slewing bearing and the effect of height is negligible under the same conditions. Furthermore, the explicit dynamic finite element analysis model was reasonable by comparing the simulation results with the test results. Therefore, the localized defect on the raceway surface of a slewing bearing can be reflected by finite element simulation analysis, and the analytical results can help develop the raceway damage monitoring system of a slewing bearing.