In this study gradient plastic strain accommodation and nanotwinning are investigated in detail using electron back scattered diffraction (EBSD) and transmission electron microscopy (TEM) techniques in AISI 321 steel after laser shock peening without applying surface protective coatings, employing multiple zigzag peening passes (3 times and 5 times). On the peened specimens, three regions, as identified by residual stress and hardness results, namely, thermally affected region (from top peened surface to 20 mu m), severe plastically deformed region (beneath 20 mu m up to 100 mu m depth) and minor plastically deformed region (beneath 100 mu m up to 180 mu m depth) were observed. Significant grain orientation spread and increased low-angle grain boundaries were noticed in severe plastically deformed region. The accommodation of plastic strain after laser peening gradually decreased from 20 mu m from peened surface. Nanotwins of varying width, in particular, multiple twinning within twin-matrix after 5 times laser peening passes were observed after peening. Interestingly nanotwins were bundled within an austenitic grain after peening with 5 passes.