Directed energy deposition (DED) additive manufacturing systems have been developed and optimized for typical engineering materials and operational requirements. However, parts fabricated via DED often demonstrate a diminished material response, encompassing inferior mechanical properties and heat treatment outcomes compared to traditionally manufactured components (e.g., wrought and cast materials). As a result, parts produced by DED fail to meet stringent specifications and industry requirements, such as those in the nuclear, oil and gas, and aeronautics sectors, potentially limiting the industrial scalability of DED processes. To address these challenges, systems integrating DED with interlayer (cold or hot) mechanical deformation (e.g., rolling and hammering/peening, forging) have been developed. These systems refine the microstructure, mitigate the typical crystallographic texture through static and/or dynamic recrystallization, and enhance mechanical properties and heat treatment responses without altering material specifications. In this regard, the present state-of-the-art review reports the DED + interlayer mechanical deformation systems and their variants, and their potential and limitations, providing a critical analysis to support the development and adaptation of this technology to overcome the process and material limitations that currently prevent the large-scale industrial adoption of DED processes. Furthermore, a detailed description of the grain size refinement mechanisms induced by interlayer mechanical deformation and their respective effects on the mechanical properties of commonly used 3D-printed engineering alloys (e.g., Ti-6Al-4V, Inconel 718, various low-alloy steels, AISI 316L stainless steel, and Al-based series 2xxx) is comprehensively analyzed.