Pneumatic shot peening is a widely used surface strengthening method. During the peening process, shots often collide with each other, resulting in large energy loss and small compressive residual stress. In order to achieve the optimum compressive residual stress with as little energy loss as possible, firstly the collision mechanism of shots and the forming and coupling mechanism of the target’s residual stress are revealed, and then pneumatic shot peening is simulated by using DEM-FEM coupling model. Then, the effects of impact angle θ, initial shot velocity v
0, shot diameter d
p, and mass flow rate r
m on the percentage η of shots with different ratios of the impact velocity to initial shot velocity v
m/v
0, the energy loss (EL), the energy transferred from shots to the target (ET), the residual energy (ER) and the compressive residual stress (RS) are investigated. The results show that as many random shots successively impact the target, the RS field induced by each shot couples with some adjacent RS fields induced by other shots, so that disperse RS fields are gradually transformed into a continuous RS layer with the compressive RS in the surface and the tensile RS in the subsurface. With the increase of θ and r
m and with the decrease of v
0 and d
p, the collision probability of shots increases, so EL also increases and η of shots with a large v
m/v
0 decreases. While, ET increases with the increase of v
0 and d
p, decreases with the increase of r
m, and first increases and then decreases with the increase of θ. ET does not entirely determine but greatly affects the compressive RS field. So, the surface compressive RS and the maximum compressive RS first increase and then decrease with the increase of θ and r
m, while the two parameters increase with the increase of v
0 and d
p. The optimum parameters of shots are θ = 75°, v
0 = 60 m s−1, d
p = 0.25 mm and r
m = 2 kg min−1, in which ET reaches 45%, the surface compressive RS of S11 and S33 reach 512 MPa and 510 MPa respectively, and the maximum compressive RS of S11 and S33 reach 665 MPa and 746 MPa respectively.