The present study evaluated the yield stress distribution in the surface layer and the fatigue properties of a steel SUS316L modified by cavitation peening (CP). The yield stress was evaluated based on micro-indentation tests using a spherical indenter. Especially, a technique of inverse analysis using elastic-plastic finite element analyses was utilized to determine the yield stress from the results of indentation tests, at which the effect of compressive residual stress introduced by CP was excluded. The identified results revealed that the surface with 50μm in thickness was remarkably work-hardened by CP, and that the yield stress was increased within 500μm in depth from the surface. Moreover, the plane bending fatigue tests demonstrated that the fatigue limit of the specimen was increased from 277MPa to 362MPa by CP. Therefore, we can conclude that CP is effective for introducing a high yield stress on the metal surface, which suppresses the initiation of surface crack during fatigue cycles.