Rotationally accelerated shot peening (RASP) is an innovative surface nanocrystallization technique, which can effectively produce gradient nanostructured layers on bulk metallic materials. In current work, the microstructural evolution and mechanical properties of the RASP‐processed 316L stainless steels are systematically explored. The results show that deformation twinning plays a significant role in fabricating nano‐grains. At the depth of ≈200 µm, unidirectional parallel mechanical twins are observed as the dominated deformation activity in each grain. With the decrease of depth (to ≈100 µm), twin‐twin intersections occur under a higher strain rate, which divide coarse grains into finer blocks. Eventually, nano‐grains form via grain rotation and grain boundary sliding at the topmost surface. Deformation twinning is still acted as an operative grain refinement mechanism in the nano‐grains. Importantly, the strength of the treated 316L stainless steel is improved while the ductility is decent. The improved strength is obtained from grain refinement, a high density of dislocations, deformation twins, and strain‐induced martensitic phase. For the good ductility, it is ascribed to the existence of slightly deformed coarse grains, ultrafine/nano‐twins and strain gradient.