Digital ferromagnetic part inspection system and method use a magnetizer for magnetizing a ferromagnetic part to be inspected, wherein a defect in or near a surface of the ferromagnetic part causes an external magnetic field. A magnetic field sensing element is positioned near the ferromagnetic part for sensing the external magnetic field. An inspection module identifies the defect in or near the surface of the ferromagnetic part by interpreting data collected by the magnetic field sensing element in response to the magnetic field sensing element being placed near the ferromagnetic part.