The traditional analytical method for calculating the contact stress of N-type planetary transmission cycloidal gears is based on the assumption of linear deformation coordination conditions, which overlooks the non-uniform stiffness distribution in cycloidal gears with thin-walled structures, especially due to the presence of pin-holes. Consequently, this approach tends to calculate conservative results for fatigue life, limiting its application in the strength design of gears. To improve the strength design methodology of gears and obtain more precise results, a loaded tooth contact model of cycloidal drive with thin-walled structure is proposed using the finite element method is this research. The maximum contact force and contact stress of the cycloidal gear are calculated using ABAQUS software. Subsequently, fatigue life analysis is conducted using FE-SAFE software. The results show that the maximum contact stress calculated by FEA is 676 MPa, which is 13.43% higher than that obtained from the analytical method. This maximum contact stress is located at the subsurface of the middle area of the fourth tooth, which also corresponds to the location with the shortest fatigue life. The fatigue life at this location is 109.172 times, with an equivalent life of 17,198 h. The method proposed in this paper allows for reducing safety redundancy while maintaining the strength design of cycloidal gears. This research provides an effective method for optimizing the strength design of cycloidal drive.