This paper investigates the effects of ultrasonic shot peening (USP) on surface morphology, microstructure, and residual stress field distribution of TC17 alloy under different process parameters. The aim is to reveal the surface strengthening mechanism of TC17 alloy caused by USP. The results suggest that the use of the 2.5 mm projectile diameter leads to an increase in surface roughness, plastic deformation, and a deeper grain refinement layer compared to the 1.5 mm projectile diameter. Additionally, it results in a greater depth of the compressive residual stress layer and maximum compressive residual stress. The crack initiation sites under two projectile diameters are located below the compressive residual stress layer. The USP treatment introduces compressive residual stress on the surface, inhibiting the initiation of surface cracks, and the deeper compressive residual stress layer offsets the early fatigue failure caused by higher roughness.