Ultrasonic impact peening (UIP) is a highly effective surface engineering technique to improve material durability through peening-induced surface plastic deformation. These improvements are determined by not only the generation of surface compressive residual stresses but also the alteration of surface morphological features. In literature, researchers have focused primarily on the average roughness (Sa) to understand the morphology changes induced by UIP. From the surface engineering perspective, in addition to Sa, other surface morphological characteristics play key roles in determining material durability, particularly surface skewness (Ssk) and surface kurtosis (Sku), which describe the asymmetrical distribution of surface profiles and the sharpness of peak features, respectively. In this study, surface morphological characteristics of API 5L X65 pipeline steel processed by UIP are investigated with a focus on the effects of processing parameters on Sa, Ssk, and Sku. The results indicate that the optimized UIP conditions lead to the preparation of surfaces with valley structures as the dominant feature accompanied by blunt peaks, resulting in the elimination of stress concentration sites towards enhanced material durability. In addition, surface hardness, residual stresses, and peening-induced deformation depth are measured. Furthermore, to gain a comprehensive understanding of the material response and the underlying mechanisms driving surface morphological alterations by UIP, a finite element method (FEM)-based model is developed. By investigating the effect of process parameters (peening amplitude, peening cycles, and pin size) on the surface deformation depth and stress/strain distribution, a correlation between these process variables with surface characteristics is established.