In the service process of gears, premature fatigue failure or fracture of gears is often caused by poor surface performance. 20CrNiMo steel is a commonly used material for gears. Laser-shock peening (LSP), carburizing treatment (CT), and hybrid modification of carburizing treatment and laser-shock peening (LSP + CT) were carried out to improve the performance of 20CrNiMo steel. The hardness, residual stress, microstructure, subgrain size, and toughness of the samples were analyzed following various modification methods. It was observed that the properties of the composite-modified gradient structure materials achieved through carburizing and laser-shock peening were superior to those modified using single methods. After the composite treatment of carburizing and laser shocking, the samples exhibited the most significant increase in hardness, up to 916HV0.1, with a surface layer experiencing residual compressive stress as low as −635 MPa. Simultaneously, a gradient microstructure was formed on the surface layer, with 80% of the crystallites being in the nanoscale range. Furthermore, the toughness was notably enhanced. Experimental results confirm the improvement in the properties of 20CrNiMo samples, resulting in the creation of a functionally graded material through the composite treatment of carburizing and laser shocking.