Microstructural variations in a shot-peened nickel superalloy after isothermal annealing were observed via scanning electron microscopy and electron backscatter diffraction analysis. The analysis was based on inverse pole figure and kernel average misorientation maps. Before annealing, a heavily plastically deformed layer was observed under the surface. Post annealing for 1 h, the uppermost 30–40 µm layer was discontinuously recrystallised and inhomogeneous strains remained in the below layers. After a particular duration, the inhomogeneous strains recovered but did not recrystallise. The threshold depth of recrystallisation depended on the inhomogeneous strains. Recrystallisation and growth progressed from the recrystallisation-threshold depth toward the surface. These microstructural variations explain the release mechanism of the residual stress induced by shot peening.