This paper systematically investigated the effect of laser shock processing (LSP) on dislocation evolution and microstructure configuration of GH2036 alloy. Surface topography and roughness were tested by Axio CSM 700 microscope. The dislocation configurations were characterized by transmission electron microscope (TEM) and simulated by multi-scale discrete dislocation dynamics (DD) method. The results have confirmed that LSP had a beneficial effect on micro-hardness, which could be increased by 16%, and the surface topography exhibited excellent stability even after thermal cycle. The dislocation density and stress–strain response have strong dependence on laser power intensity. Reasonable agreement between DD simulation and experiments is achieved. The results showed that complex random microstructures can be observed in the shocked surface. The grain refinement mechanism of LSP GH2036 involves dislocation segmentation and twin intersections.