With a 6 kW fiber laser, Fe17Mn5Si10Cr5Ni shape memory alloy coating is obtained by powder presetting and laser cladding on the 304 stainless steel surface. Microstructure and phase composition of the coating is studied by the scanning electron microscope, X-ray diffractometer and reciprocating friction tester. Wear resistance and contact fatigue strength of the coating and substrate are analyzed, and residual stress is measured with the orifice method. Results show that the coating is composed of planar crystal, cellular crystal and columnar crystal from the bottom of molten pool to surface; wear mechanism of the coating is abrasive wear, while that of the substrate is adhesive wear, and wear loss of the coating is nearly a third of that of the substrate; and wear resistance and contact fatigue strength of the coating are better than those of the substrate. Besides, residual stress of the coating is smaller than that of the substrate. The key reason for good mechanical properties of the coating is the stress induced γ→ε phase transformation.