The study examines how SMAT influences the microstructure, dislocation density, and residual stress of AA7075-T6 alloy. SMAT involves the repeated impact of shots on a material surface within a vibration chamber, inducing severe plastic deformation and grain refinement. The study explores the interplay between vibration-induced shot effects and their impact on surface properties, emphasizing the importance of optimizing process parameters for improved material performance. Experimental analyses, including surface and subsurface microstructure examinations, X-ray diffraction (XRD) characterization, and residual stress evaluations, are conducted to elucidate the underlying mechanisms of SMAT. Results indicate that SMAT leads to significant plastic deformation, grain size reduction, increased dislocation density, and microstrain. The treatment produces a nanocrystallite layer, enhancing material properties. Residual stress measurements reveal a surface stress of −245 MPa, increasing to −360 MPa at 50 µm depth. The proposed multiple impact model accurately predicts deformation behavior, highlighting the deep pit regions formed during SMAT. This comprehensive investigation provides insights into the dynamic nature of SMAT and its potential for enhancing material properties. By integrating experimental findings with numerical modeling approaches, the study advances our understanding of SMAT-induced plastic deformation mechanisms and residual stress profiles.