Multi-pass fusion welding by a filler material (wire) is normally carried out to join thick steel sections used in most engineering applications. Multiple thermal cycles from a multi-pass weld resulted in a variable distribution of residual stress field across the weld and through the thickness. Presence of tensile residual stresses can be detrimental to the integrity and the service behaviour of the welded joint. In addition to a complex distribution of residual stress state, multipass welds also form dendritic grain structure, which are repeatedly heated, resulting in segregation of alloying elements. In this research, microstructural refinement with modification of residual stress state was attempted by applying post-weld cold rolling followed by laser processing and then cold rolling. The residual stress was determined non-destructively by using neutron diffraction. Post-weld cold rolling followed by laser processing was carried out to induce recrystallization of the cold rolled grains. Microstructural characterisation indicates a significant grain refinement near the capping pass. However, post-weld cold rolling followed by laser processing reinstates the lock-in stress. In this study, it was demonstrated that a complete recrystallized microstructure with compressive state of stress can be formed when a further cold rolling is applied on the laser processed, recrystallized microstructure.