The microstructure and phase composition of 304 stainless steel fabricated by laser cladding are studied by scanning electron microscopy, X-ray diffraction and transmission electron microscopy. The results show that the cladding layer is mainly composed of austenite (γ) phase and FeCr (σ) phase, and the atomic ratio of Fe to Cr in the σ-phase is close to 1∶1. The γ-phase is in the form of fine and dense dendrites, while the σ phase is mainly in the form of long strips with a width of about 200 nm and locates in the dendritic interstices. During the rapid solidification of the cladding layer, the σ phase precipitates from the inter-dendritic eutectic ferrite (δ). A large amount of γ/δ interfaces formed by the inter-dendritic eutectic can effectively reduce the difficulty of nucleation of the σ-phase, and the enrichment of the inter-dendritic Cr element can promote the formation and coarsening of the σ-phase. Therefore, compared with the σ-phase precipitated in the solid solution process of stainless steel, the σ-phase precipitated in the laser cladding process has short formation time and large size.