Shot-peening was performed for TC4 titanium alloy sample and then its microstructure was analyzed by OM, SEM and TEM. The microhardness distribution along surface layer was determined and based on the results the microstructure characteristics in shot- peened layer and the mechanism of work hardening were analyzed. The results show that after shot-peening, dislocation movement and configuration change refine the microstructure and substructure of TC4 alloy surface layer, and twins are formed in the deformed area of the surface layer, resulting in significant work hardening effect.