Present paper describes microstructural and mechanical characterization of laser-clad composite joint made of Stellite 21 and type 316L stainless steel (SS). The study has been broadly performed on two kinds of laser-clad specimens viz. (i) involving direct deposition of Stellite 21 on SS and (ii) involving gradient in chemical composition across substrate/clad interface. Both kinds of specimens exhibited nearly similar tensile strength, which was higher than that of SS in the interface region. Inter-dendritic carbides provided low energy fracture path in laser-clad deposits of Stellite 21. Both direct and graded interfaces of laser-clad specimens exhibited superior fatigue strength than the SS substrate. Instrumented impact testing brought out distinct difference in the mode of crack propagation across direct and the graded clad specimens. In contrast to initiation-controlled brittle crack propagation across the interface region in “direct clad” specimens, crack propagation across “graded interface” was marked with significant plastic deformation.