This study presents a comprehensive numerical dynamic finite element analysis to investigate the dynamic behavior and induced stresses of axially functionally graded rotating beam, for the first time. The material properties of the rotating beam are assumed to continuously vary nonlinearly along the longitudinal direction according to the power law. Based on Timoshenko beam theory (TBT), the Hamiltonian principle is applied to derive governing equations of motion. The dynamic finite element equation of motion for axially functionally straight rotating cantilever beam is derived. Both stress and vibration responses are detected and analyzed. The proposed computational procedure is verified by comparing the obtained results with the corresponding results in the literature and good agreement is observed. Effects of the material gradation index and the rotating speed on the dynamic behavior of functionally graded rotating cantilever are investigated and analyzed. The obtained results show the significant effect of the material gradation index and the rotating speed on the dynamic behavior of axially functionally graded beams. The proposed model can be used effectively in design of wind turbine, rotation shafts and turbomachinery systems.