With respect to post-processing techniques in the field of surface engineering, it was recently found that machine hammer peening (MHP) represents a promising approach to functionalizing thermally sprayed coatings as the MHP contributes to a compression of the coating, enabling the potential to reduce the coating porosity as well as the protruding peaks of the rough as-sprayed coating surface. The MHP also has the potential to induce compressive residual stresses in the coating surface, which can positively affect the mechanical and tribological properties. Arc-sprayed tungsten carbide-reinforced Fe-based coatings pose an appropriate candidate to counteract the wear of tribologically stressed surfaces. Due to the inherent process characteristics, however, these coatings are mostly characterized by a heterogeneous lamellar microstructure with residual porosity and interstratified with a certain amount of oxides, as well as the presence of tensile residual stresses. To adjust their microstructural and mechanical coating properties, the applicability of a subsequent MHP was evaluated in this study. Therefore, arc-sprayed WC-W2C reinforced FeCMnSi coatings are deposited using either argon or compressed air as atomization and shroud gas, providing different lamellar structures and oxide content. The effect of MHP on the surface integrity of the WC-W2C-FeCMnSi coating is investigated with respect to its porosity, lamellar structure, hardness, and residual stresses, which are known as relevant influencing factors on the performance of tribologically stressed components. It was found that the MHP leads to reduced porosity and lamella thickness as well as increased hardness due to strain hardening effects. Furthermore, it was demonstrated that the MHP leads to the introduction of compressive residual stresses, which contribute to a decline in tensile residual stresses in the near-surface area.