Generally the fatigue life of the components can be improved by introducing compressive residual stresses up to certain depth from the surface. Laser shock processing (LSP) is one of the surface treatment processes to improve fatigue life of the components. When a short duration laser pulse with high power density (more than 1 GW/cm2) irradiates target surface coated with sacrificial layer in a confined medium generally, shock waves are produced. These shock waves deform the target surface plastically and strengthen the material surface up to certain depth to induce residual stresses. LSP improves many properties of the target material such as fatigue life, wear and corrosion resistance, hardness, and etc. This paper reviews the physics involved at all stages of the process generation of plasma at confined medium-material interface and laser induced shock waves, and generation of residual stresses. Also, the effect of various input parameters such as laser parameters, sacrificial layer material, sacrificial layer material thickness, and etc. on residual stress and hardness is discussed. Finally, the applications and challenges of the LSP are also discussed. © 2017 Elsevier Ltd. All rights reserved.