The stability threshold of a rotor-bearing system having a transverse crack has been studied by using FEM and considering the various crack parameters and shaft internal damping (viscous and hysteretic damping) and geometric parameters. It has been observed that the instability speed has reduced considerably with increase in crack depth and influenced more with hysteretic damping compared to viscous damping. The stability of the rotor system including shaft with two open cracks has also been carried out and observed the influence of one crack over the other for threshold speed limits.