Hammer peening is one of techniques for improving fatigue strength by introducing compressive residual stress at weld toe. Hammer peening by using ICR (impact crack closure retrofit) treatment device, where flat area in front of weld toe is intentionally peened, is also able to introduce compressive residual stress at weld toe as well as near the peened area. In this study, distribution of residual stress introduced in steel plate by peening with ICR device was measured and simulated by finite element analysis considering inelastic and large deformation behavior. In the analysis, strain due to thermal expansion was computed to simulate the peening effect. The analytical showed good agreement with the test results.