Abstract: The microstructure characteristics and strengthening mechanism of Inconel738LC (IN-738LC) alloy prepared by using induction-assisted directed energy deposition (IDED) were elucidated through the investigation of samples subjected to IDED under 1050°C preheating with and without hot isostatic pressing (HIP, 1190°C, 105 MPa, and 3 h). Results show that the as-deposited sample mainly consisted of epitaxial columnar crystals and inhomogeneously distributed γ' phases in interdendritic and dendritic core regions. After HIP, grain morphology changed negligibly, whereas the size of the γ' phase became increasingly even. After further heat treatment (HT, 1070°C, 2 h + 845°C, 24 h), the γ' phase in the as-deposited and HIPed samples presented a bimodal size distribution, whereas that in the as-deposited sample showed a size that remained uneven. The comparison of tensile properties revealed that the tensile strength and uniform elongation of the HIP + HTed sample increased by 5% and 46%, respectively, due to the synergistic deformation of bimodal γ' phases, especially large cubic γ' phases. Finally, the relationship between phase transformations and plastic deformations in the IDEDed sample was discussed on the basis of generalized stability theory in terms of the trade-off between thermodynamics and kinetics.