Aluminizing is a diffusion based chemical surface treatment on materials to provide excellent protection against high temperature oxidation and corrosion, but is likely to be accompanied by a degradation in mechanical properties. Laser shock peening (LSP) is a superior laser based surface strengthening technique for enhanced mechanical properties. In this study, we focus on combining these two methods on the AISI 321 stainless steel to introduce both chemical and structural gradients for superior properties. Comparative investigation on both the microstructure and mechanical properties of the as received 321 steel, aluminized 321 steel and the aluminizing + LSP processed steel indicated that: (1) A three-layer protective coating was introduced on the surface of the aluminized steel and the concentration of Al decreased gradually from the outermost layer to a certain depth, forming B2-FeAl(Cr) solid solution and Al2O3 in Layer-I, B2-FeAl and DO3-Fe3Al phases in Layer-II and BCC-Fe(Cr,Al) solid solution phase in Layer-III, with B2-NiAl precipitates distributed in Layer-II and Layer-III. (2) After LSP treatment, a dislocation density gradient from the surface to the matrix, dislocation-precipitate interactions and a significant compressive stress were introduced. (3) Though the aluminized steel exhibited a decrease in the high temperature tensile properties compared to that of the as received 321 steel, the aluminizing + LSP processed steel achieved a striking enhancement. The formation of three-layer coating, dislocation density gradient, dislocation-precipitate interactions and the residual stress contribute jointly to gain the yield strength, ultimate strength and fracture elongation up to 265 MPa, 430 MPa and 37.5 % at 620 °C, respectively.