The formation abilities of nano-twin and epsilon-martensite in Fe-based laser surface modification layer were investigated. The result shows that nano-twin and e-martensite grow by the overlapping of stacking faults on each and two (111), planes respectively. Si atom obviously affects the formation ability of stacking fault. A single Si atom in the supercell is the most effective way to the stress-induced nucleus of nano-twin. The nano-twin and epsilon-martensite can form easily as the distance between two Si atoms along [111], is twice interplanar crystal spacing of (111)(gamma), and the formation ability of epsilon-martensite is higher than that of nano-twin.