A new peening process for introducing compressive residual stresses with less erosion and good surface finish using a high pressure oil jet was developed. Aluminium alloy, AA 6063 was peened with an oil pressure of 50 MPa at different stand-off-distances. Residual stresses measured using X-ray diffraction indicated the induction of about 50 MPa (compressive) residual stresses on the surface. The depth of compressive residual stress developed was about 250 μm. The surface roughness of the oil jet peened surface depends on the stand-off-distance. Significant work hardening was observed at low stand-off-distances. The temperature rise during the process was marginal and doesn't contribute to stress relaxation. Erosion during the process was also reported based on the mass loss rate measured.