To investigate the relationship between the dislocation configuration and the grain refinement in the NV E690 cladding layer caused by laser shock peening, NV E690 high-strength steel powder was used to repair prefabricated pits in samples of 690 high-strength steel by laser cladding, where the laser shock peening of the cladding layer was performed by laser shock at different power densities. X-ray diffraction, scanning electron microscopy, and transmission electron microscopy were used to observe the microstructures of these samples before and after the laser shock process. The results showed that the metallurgical bonding between the cladding layer and the substrate after laser cladding repair was good. When the laser power density was 4.77 GW/cm2, multiple edge dislocations, dislocation dipoles, and extended dislocations were distributed over the cladding layer. When the laser power density was 7.96 GW/cm2, a geometrically necessary dislocation divided the large original grain into two subgrains with different orientations. When the laser power density was 11.15 GW/cm2, geometric dislocations divided the entire large grain into fine grains. The grain refinement model of the NV E690 cladding layer, when treated by laser shock peening, can describe the grain refinement process induced by the dislocation movement of this cladding layer.