The microstructural distribution in the heat-affected zone (HAZ) under the stainless overlay cladding of low alloy steel was investigated. The distribution of the coarse-grain (CG) HAZ and the fine-grain (FG) HAZ by metallurgical observation agreed well with the results of finite element analysis. Base metal contained mixed bainite with ferrite, whereas the CGHAZ and the FGHAZ contained mixed lower bainite with martensite and mixed upper bainite with ferrite, respectively. Ferrite fraction in FGHAZ was higher than those other areas. After ion irradiation with 0.5 dpa, irradiation hardening of HAZ was higher than that of base metal. The irradiation hardening increased with increasing volume fraction of solute clusters, although irradiation hardening at the FGHAZ was greater than that at the CGHAZ, which contained more clusters than the FGHAZ. This difference in irradiation hardening may be due to the differences in the amount of ferrite and others in the different microstructures.