The effects of microstructure on the damping capacity and tensile properties of 316L stainless steel were investigated. Increasing the degree of cold working, the volume fraction of e-martensite decreased after rising to maximum value at specific level of cold working, the volume fraction of α'-martensite slowly increased and then dramatically increased from the point of decreasing e-martensite volume fraction. Increasing the degree of cold working, the behavior of damping capacity is similar to that of the e-martensite. After the damping capacity showing the maximum value at about 20% of cold rolling, damping capacity was decreased with the volume fraction of e-martensite. Tensile strength was proportional to the volume fraction of α'-martensite, and elongation steeply decreased in the range low volume fraction of α'-martensite, then slowly decreased in range the above 10% volume fraction of α'-martensite. The damping capacity and elongation is strongly controlled by the volume fraction of e martensite with liner relationship. However, the effect of the volume fraction of α'-martensite and austenite phase on the damping capacity was not observed. Tensile strength was governed by the volume fraction of α'-martensite.