Wire arc-directed energy deposition (WADED) has shown great advantages and potential in fabricating large-scale aluminum (Al) alloy components. However, WADED Al alloys typically exhibit low strength and reliability due to pore defects and lack of work hardening or precipitation strengthening. This study utilized a combination of laser shock peening (LSP) and annealing to regulate the microstructure of WADED Al-Mg4.5Mn alloy and enhance mechanical properties. The effects of LSP and annealing on phase composition, pore distribution, and microstructures at multiple scales were systematically investigated to reveal the mechanical property improving mechanism. The results demonstrated that LSP-induced plastic deformation formed a defect-free zone by closing near-surface pore defects. LSP created the hardened layer with gradient mechanical properties by inducing gradient changes in grain size, the number of low-angle grain boundaries (LAGBs), and dislocation density along the depth direction. The annealing process promoted grain coarsening and reduced excessive dislocations and LAGBs, weakening the work hardening effect caused by LSP. Furthermore, the high-density dislocations and high stored energy generated by LSP accelerated the recrystallization, facilitating growth of near-surface grains. The defect-free zone, dislocation strengthening, and LAGBs strengthening were responsible for the increase in strength, while the synergistic deformation between hardened layers and soft core facilitated maintaining excellent elongation. The strength and elongation of WADED Al alloy can be synergistically improved by balancing the effects of LSP and heat treatment.