In laser cladding thermal contraction of the initially liquid coating during cooling causes residual stresses and possibly cracks. Preweld or postweld heating using inductors can reduce the thermal strain difference between coating and substrate and thus reduce the resulting stress. The aim of this work is to better understand the influence of various thermometallurgical and mechanical phenomena on stress evolution and to optimize the induction-assisted laser cladding process to get crack-free coatings of hard materials at high feed rates. First, an analytical one-dimensional model is used to visualize the most important features of stress evolution for a Stellite coating on a steel substrate. For more accurate studies, laser cladding is simulated including the powder-beam interaction, the powder catchment by the melt pool, and the self-consistent calculation of temperature field and bead shape. A three-dimensional finite element model and the required equivalent heat sources are derived from the results and used for the transient thermomechanical analysis, taking into account phase transformations and the elastic-plastic material behavior with strain hardening. Results are presented for the influence of process parameters such as feed rate, heat input, and inductor size on the residual stresses at a single bead of Stellite coatings on steel.