Due to the thermal deformation and crack of laser cladding layers induced by residual stress, a treatment of laser shock processing (LSP) is performed to remove the residual stress of Fe314 alloy cladding layer, its mechanics and residual stress distribution are investigated as well. Results show that residual stress can be removed significantly when a high specific energy of laser cladding comprised of slow scanning speed, small spot size and low powder feed rate is adsorbed by melt pool. Furthermore, LSP decreases the residual stress, and with the number of LSP increasing, the residual stress of cladding layer descends gradually while the removing capability attenuates. The mechanics of variation show that a micro-plastic deformation appears on the Fe314 cladding layer surface, which is induced with a huge strain rate of shock wave. A compression stress field is formed and removes the tensile stress of cladding layer. It is observed that mass dislocation lines emerge in the γ-Fe grain due to LSP. Then a dislocation wall is formed and separates one grain into several subgrains. Eventually, the effect of grain refinement is occurred in the Fe314 alloy cladding layer.