The effects of laser peening (LP) on fatigue limit improvement and acceptable defect size of a high strength steel HT780 (JIS-SHY685) welded joint were investigated. Fatigue tests were performed, following the optimization of the LP conditions. The fatigue limit of the welded specimen without the defect increased by 45% via LP. The specimen containing 0.2 mm deep semicircular defect at the weld toe reached almost the same level of fatigue limit as that of the defect-free, LP-treated specimen. Therefore, a semicircular defect of less than 0.2 mm deep could be rendered harmless by LP. From the results, the fatigue strength and the reliability of HSS-welded joints can be significantly improved by LP. The dominant factor that contributed to fatigue limit improvement was the introduction of compressive residual stress by LP.