Laser controlled melting in nitrogen of a preprepared steel surface has been carried out. A carbon film formed from a phenolic resin precursor containing 5 vol.-% of TiC particles was first formed at the surface of the steel before the laser treatment. The morphological and metallurgical changes in the laser treated region were examined using scanning electron microscopy and X-ray diffraction (XRD). Temperature and stress fields were predicted in the workpiece using a finite element code. The residual stress at the surface was measured using XRD. The hardness of the workpiece was measured using microindention testing. It was found that the laser treatment results in a dense layer composed of fine grains and TiC particles at the surface, which enhances surface microhardness. The presence of the carbon film at the surface and high pressure nitrogen gas enable the formation of FeN3 and Fe(N, C) phases at the surface and nitrogen diffusion into the substrate material causes nitride precipitation below the surface. The residual stress measured using the XRD technique at the surface region is -420 MPa, which is in agreement with the numerical predictions.