Laser shock processing (LSP) is a novel surface engineering technique that utilizes a nanosecond pulse laser to generate plasma-driven shock waves, which can induce high compressive residual stresses extending to a depth of more than 1 mm from the surface. It has been widely applied to metallic components in aircrafts to improve the fatigue resistance. However, the fundamental mechanisms underlying the effects of LSP on the different materials and their performance remain poorly understood. This manuscript reviews the novel research studies by our team to use experimental approaches to understand the microstructural evolution in metal and ceramic materials during the LSP process, and elucidate the mechanisms that enable LSP to improve mechanical and irradiation properties. In austenitic steels, we discovered that the LSP-induced microstructures could improve the resistance to irradiation damage. The mechanisms are related to the defect sinks generated by LSP such as dislocations and twin boundaries. Compared to metals, LSP has not been widely applied to ceramics and its mechanisms on ceramics are less understood. LSP of alumina ceramics can induce localized plastic deformation near the surface and along grain boundaries. As a result, the mechanical properties of ceramic materials such as fracture toughness can be improved.