Under extreme conditions in fields including aerospace exploration, deep earth excavation, and ocean engineering, mechanical components are subjected to severe environmental challenges, such as high temperature, heavy load, fatigue fracture and corrosion, which significantly limit their service life and operational reliability. Surface engineering has emerged as a critical strategy to address these problems by modifying surface characteristics while preserving basic properties of raw materials. Among various surface modification techniques, laser-based surface modification stands out due to its precise processing, high throughput, and outstanding surface performance. However, laser-based surface modification of metallic materials for industrial applications remains limited owing to inadequate systematic understanding regarding the fabrication mechanisms. Accordingly, a comprehensive and holistic review is essential to elucidate the effect of laser-based surface modification on process optimization, system development, microstructure evolution, and performance enhancement. This review systematically expounds two fundamental strategies in laser surface modification-based material modification (exemplified by laser cladding) and structural modification (exemplified by laser shock peening) in terms of mechanism, process, performance and application. In addition, the mechanism and potential of the synergistic integration of LC (laser cladding) and LSP (laser shock peening) are emphatically discussed. Finally, perspectives regarding process optimizations, material developments, and system improvements for laser surface engineering are presented. By establishing a clear “mechanism–process–performance–application” narrative, this review aims to provide both a scientific reference and a practical guideline for the severe demands of extreme operating conditions.