A new surface modification process was developed to introduce compressive residual stresses at the surface of components. In this process, instead of oil droplets a high-velocity cavitation jet (cloud of oil bubbles) impinges on the surface of the component to be peened. The impact pressure generated during implosion of cavitation bubbles causes severe plastic deformation at the surface. Consequently, beneficial compressive stresses are developed at the surface. In order to find the potential of this process, aluminum alloy AA6063-T6 specimens were peened at a constant cavitation number with various nozzle-traveling velocities. Residual stress induced by oil jet cavitation peening was measured using X-ray diffraction. Oil cavitation jet peening results in a smooth and hard surface. The developed compressive residual stresses at the peened surface are about 52%, 42%, and 35% of yield strength in samples for peened at nozzle traveling velocities of , , and , respectively.