Experiments of laser-shocked surface modification of solution-treated 304 austenitic stainless steel specimens are carried out by means of NdYAG laser setup with 1064 nm output wavelength. The phenomenon of the thermo-induced regression and its effect on property of the laser-shocked surface are analyzed via transmission electron microscope, scanning electron microscope method and micro-hardness measurement. Experimental results show that deformation microstructure evolution in grains is the basic strengthening mechanism during the surface modification by laser shock processing. The microstructure in the deformed layer of the solution-treated 304 stainless steel consists of stacking faults and partial dislocations, dislocation networks and cells, and deformation twins. These deformation microstructures are liable to regress upon reheating. It is discovered that the regression process includes stacking faults disappearance, dislocation density decreasing and twins decomposition, and surface hardness of the laser-shocked layer returns to the original value of matrix. Meanwhile, micro-damage of deformation twins owing to the internal stress adjustment in the process is observed. Thermo-induced regression coefficient of about 0.35 is obtained for the laser-shocked surface modification of solution-treated 304 austenitic stainless steel.