As a prospective candidate material for surface coating and repair applications, nickel-based superalloy Inconel 718 (IN718) was deposited on American Iron and Steel Institute (AISI) 4140 alloy steel substrate by laser engineered net shaping (LENS) to investigate the compatibility between two dissimilar materials with a focus on interface bonding and fracture behavior of the hybrid specimens. The results show that the interface between the two dissimilar materials exhibits good metallurgical bonding. Through the tensile test, all the fractures occurred in the as-deposited IN718 section rather than the interface or the substrate, implying that the as-deposited interlayer bond strength is weaker than the interfacial bond strength. From the fractography using scanning electron microscopy (SEM) and energy disperse X-ray spectrometry (EDS), three major factors affecting the tensile fracture failure of the as-deposited part are (i) metallurgical defects such as incompletely melted powder particles, lack-of-fusion porosity, and micropores; (ii) elemental segregation and Laves phase, and (iii) oxide formation. The fracture failure mechanism is a combination of all these factors which are detrimental to the mechanical properties and structural integrity by causing premature fracture failure of the as-deposited IN718.