This paper presents the results of a study of 17%Cr-19%Mn-0.53%N high-nitrogen austenitic stainless steel with a 25 µm thick dispersion-hardened near-surface layer intended for orthopedic applications. It was modified using a mechanical–thermal treatment (MTT) that included both friction processing and subsequent electron beam processing. The friction processing enabled the formation of a microstructure with a high dislocation density and strain twins, and it also initiated strain aging in the near-surface layer. At this stage, the hardening was achieved via the formation of CrN particles coherent to the matrix with the face-centered cubic (FCC) lattice and via the relaxation of internal stresses. After electron beam processing, the volume fraction of the nanodispersed phases increased. In the near-surface layer, a highly dispersed microstructure with a grain size of 3 μm, reinforced with CrN and Fe2N nanoparticles, was observed using transmission electron microscopy. The MTT increased the microhardness of the surface layer, and this contributed to the enhancement in both the H/E and H3/E2 ratios. This indicated an improvement in the crack resistance of the steel under frictional loads. The MTT also enhanced both the yield point (up to 580 MPa) and the wear resistance (by 50% to 100%, depending on the applied load) compared with those of the same steel after it had undergone quenching. In addition, the wear resistance was many times greater than that of the Ti-6Al-4V alloy typically used for manufacturing orthopedic implants. After the MTT, the properties of the near-surface layer of the steel indicated its suitability for biomedical applications.