Laser-assisted milling (LAM) is generally regarded as a promising method for machining hard-to-cut materials. The residual stress generated in LAM has a significant influence on the fatigue life, accuracy stability, and corrosion resistance of parts. An analytical model is presented in this paper to predict the residual stress distribution induced in the LAM process. The material softening behavior caused by laser heating and its effect on the distributed loads and mechanical stresses are considered. To achieve this, a flow stress model considering the comprehensive impacts of laser heating and plastic deformation is adopted. A series of LAM experiments are performed to verify the residual stress model. Reasonable agreement between the predicted and measured results indicates the proposed model is feasible. The effect of feed rate and radial cutting depth on surface residual stresses is then discussed theoretically. A moderate feed rate (about 100 mm/min) is recommended to obtain higher surface compressive residual stresses. The findings can be further used in process parameter optimization to improve the surface integrity and processing efficiency of LAM.