The effect of martensitic phase transformation on cavitation erosion resistance for a deposited layer prepared from a Fe-8Cr- C-1.5Al-Ti flux-cored wire of metastable steel was studied. A reference material of AISI 316L stainless steel was used as a substrate. Cavitation tests were performed using a modified ultrasonic tester. X-ray diffraction was used to examine the phase transformation before and after cavitation tests. Also, the eroded surfaces of specimens were investigated by optical microscope (OM), scanning electron microscope (SEM), and 3D optical profilometer. The cavitation results revealed that the deposited layer exhibited a resistance to cavitation erosion approximately 10 times higher than the AISI 316L steel due to the martensitic phase transformation occurring during the cavitation process. The phase transformation plays a main role to minimize the cavitation damage of specimen. This is due to the fact that it contributes to obstructing movement of dislocations and increasing the hardness as a result of the increased hardening on the surface.