The strength–ductility mechanism of the low-carbon steels processed by laser cutting is investigated in this paper. A typical gradient-phased structure can be obtained near the laser cutting surface, which consists of a laser-remelted layer (LRL, with the microstructure of lath bainite + granular bainite) and heat-affected zone (HAZ). As the distance from the laser cutting surface increases, the content of lath martensite decreases in the HAZ, which is accompanied by a rise in the content of ferrite. Considering that the microstructures of the LRL and HAZ are completely different from the base metal (BM, ferrite + pearlite), a significant strain gradient can be inevitably generated by the remarkable microhardness differences in the gradient-phased structure. The hetero-deformation-induced strengthening and hardening will be produced, which is related to the pileups of the geometrically necessary dislocations (GNDs) that are generated to accommodate the strain gradient near interfaces. Plural phases of the HAZ can also contribute to the increment of the hetero-deformation-induced strengthening and hardening during deformation. Due to the gradient-phased structure, the low carbon steels under the process of laser cutting have a superior combination of strength and ductility as yield strength of ~487 MPa, tensile strength of ~655 MPa, and total elongation of ~32.7%.