Austenitic stainless steels used in structural applications suffer from stress corrosion cracking due to residual stresses during welding. Much research is being conducted to prevent the stress corrosion cracking of austenitic steels by inducing compressive residual stresses. One method is ultrasonic shot peening (USP), which is used to apply compressive stress by modifying the mechanical properties of the material’s surface. In this study, 304L stainless steel was butt-welded by gas tungsten arc welding (GTAW) and subsequently subjected to compressive residual stress to a depth of 1 mm from the surface by a USP treatment. The influence of USP on microstructural changes in the base metal, the HAZ and weldment, and the corrosion properties was analyzed. A microstructural analysis was conducted using SEM-EDS, XRD, and EBSD methods alongside residual stress measurements. The surface and cross-sectional corrosion behavior was evaluated and analyzed using a potentiodynamic polarization test, electrochemical impedance spectroscopy (EIS) measurements, a double-loop electrochemical potentiokinetic reactivation (DL-EPR) test, and an ASTM A262 Pr. C test. The surface was deformed and roughened by the USP. The deformed areas formed crevices, and the inside of the crevices contained some cracks. The crevices and internal cracks caused pitting, which reduced the resistance of the passivation film. The cross-section was subjected to compressive residual stress to a depth of 1 mm from the surface, and the outermost area of the cross-section had fine grain refinement, forming a solid passivation film that improved the corrosion resistance.