Cavitation erosion is the primary cause of material failure of the hydroelectric power plant components. The rapid development in the advanced surface engineering techniques has provided an effective treatment solution for cavitation erosion. One such novel method is microwave cladding. Hence, the Ni–40Cr3C2 composite clad was deposited on austenitic stainless steel (SS-316) using a microwave cladding process in the present study. The processing was carried out in a domestic microwave oven of 2.45 GHz frequency and 900 W power. The developed clad was thoroughly characterized for the metallurgical and mechanical properties related to its behavior as a successful cavitation erosion resistance material, like microstructure, crystal structure, porosity, microhardness, flexural strength, and fracture toughness. The results showed that the stripe-type and agglomerated carbides were present in the Ni–40Cr3C2 clad. The developed composite clad consists of various carbides (SiC, Ni3C, Cr3Ni2SiC, Cr7C3, and NiC) and intermetallic phases (Ni3Fe, Ni2Si, and Cr3Si). Microhardness, flexural strength, and fracture toughness of the microwave-processed clad were observed to be 605 ± 80 HV0.3, 813.23 ± 16.2 MPa, and 7.44 ± 0.2 MPa√m, respectively. The microwave-processed composite clad performance in terms of cavitation erosion resistance was determined using the ultrasonic apparatus (ASTM-G32-17). The cavitation experiments were carried out according to Taguchi L9 orthogonal array, taking into account three parameters: standoff distance, amplitude, and immersion depth. The developed composite clad exhibited significant resistance (mass loss 7.6 times lesser as compared to SS-316) to cavitation erosion. ANOVA results showed the standoff distance as the most important factor followed by amplitude and immersion depth. Least cavitation resistance was observed at a smaller standoff distance, higher amplitude, and lower immersion depth. Linear regression equations were obtained to establish the correlation between parameters and cumulative mass loss. The microwave clad specimens tested at optimized test parameters were damaged in the form of fractured intermetallic, extruded lips, pits, and craters.