Laser metal forming is an attractive process for rapid prototyping or the rebuilding of worn parts. However, large tensile stress may arise in layers deposited by laser melting of powder. A potential solution is to preheat the substrate before and during deposition of layers to introduce sufficient contraction during cooling in the substrate to modify the residual stress distribution in the deposited layers. To demonstrate the value of this approach, specimens were prepared by depositing stellite F on a stainless steel substrate with and without preheating. Residual stresses were computed by numerical simulation and measured using the crack compliance method. For non-preheated specimens simulation and experiment agreed well and showed that extremely high residual tensile stresses were present in the laser melted material. By contrast, pre-heated specimens show high compressive stresses in the clad material. However, in this case the numerical simulation and experimental measurement showed very different stress distribution. This is attributed to out of plane deformation due to the high compressive stresses which are not permitted in the numerical simulation. A ‘‘strength of materials’’ analysis of the effect of out of plane deformation was used to correct the simulation, Agreement with experimental results was then satisfactory.