The thermal stability of microstructures induced by laser shock peening (LSP) in TC17 titanium alloy (Ti-5Al-2Sn-2Zr-4Mo-4Cr) was investigated by comparing the microstructural characteristics and mechanical properties, which were characterized by transmission electron microscopy (TEM) and Vickers hardness tests of LSPed and subsequently annealed samples. The LSPed TC17 titanium alloy samples were annealed at 573, 623, 673, and 723 K for 1 h. Comparison of the gradient microstructures studied at different depths of the LSPed and LSP+573 K/1 h and LSP+673 K/1 h annealed specimens indicated that the dislocation density markedly decreased and the dislocation cells became clearer in the 573 K/1 h annealed specimen while there were no great changes in deformation twin density and the average grain size at the surface did not change greatly. After annealing at 673 K for 1 h, the dislocation density and deformation twins density both decreased greatly at different depths and the average grain size at the surface increased compared to the LSPed and 573 K/1 h annealed specimens. The average grain sizes in the top surface layers of the LSPed, 573 K/1 h, 623 K/1 h, 673 K/1 h and 723 K/1 h annealed samples were 396 nm, 422 nm, 493 nm, 1.04 μm, and 2.46 μm, respectively. The critical temperature at which the microstructures of the LSPed TC17 titanium alloy changed significantly was 673 K; the fine grains at the top surface started abnormal growth when the annealing temperature exceeded that value. The hardness values decreased significantly when the annealing temperature reached 673 K. It can be concluded that 673 K was the critical temperature below which the microstructures induced by LSP were thermally stable in the TC17 titanium alloy.