In this study, in-situ shot-peening approach was introduced by mixing large stainless steel (SS) shots with diameters over 150 μm with IN718 spray powders to aim at developing a novel approach to achieve dense coating. Effect of mixed stainless steel shot content on the microstructure and mechanical properties of the IN718 coating was examined. Results show that IN718 coating can be deposited without any shot peening particle inclusions for their relatively low velocity. It was revealed that the deposition efficiency of the IN 718 powders is improved by the in-situ shot peening effect. With increasing shot fraction in the powder mixture from 0% to 50 vol.%, the coating porosity decreased from 5.6% to 0.2% only by using N2 accelerating gas. Remarkable work hardening induced by impact of the shot peening particles was detected.