During conventional submerged laser peening, the impact force induced by laser ablation is used to produce local plastic deformation pits to enhance metallic material properties, such as fatigue performance. However, a bubble, which behaves like a cavitation, is generated after laser ablation, known as “laser cavitation.” On the contrary, in conventional cavitation peening, cavitation is generated by injecting a high-speed water jet into the water, and the impacts of cavitation collapses are utilized for mechanical surface treatment. In the present paper, a mechanical surface treatment mechanism using laser cavitation impact, i.e., “laser cavitation peening”, was investigated, and an improvement in fatigue strength from laser cavitation peening was demonstrated. The impact forces induced by laser ablation and laser cavitation collapse were evaluated with a polyvinylidene fluoride (PVDF) sensor and a submerged shockwave sensor, and the diameter of the laser cavitation was measured by observing a high-speed video taken with a camera. It was revealed that the impact of laser cavitation collapse was larger than that of laser ablation, and the peening effect was closely related to the volume of laser cavitation. Laser cavitation peening improved the fatigue strength of stainless-steel welds.