The accurate assessment of welding induced residual stress field is always of significant interest due to its adverse effect on the structural stability and mechanical performance of welded structure. Incorporation of intricate phenomena, in particular, thermal gradient, phase development, volumetric dilation, and phase transformation strain during FE modeling, not only act as a reliable method for residual stress calculation but also serves as a directive to reduce tensile residual stress in a weldment, which is sensitive to the selection of materials. To investigate the same for continuous and pulse laser welded Ti-6Al-4V alloy, the sequential coupled thermal-metallurgical-mechanical models are established. The internal state-dependent variables (SDVs) are implemented to capture the growth of phase evolved during diffusionless β → α′ transformation using Koistinen-Marburger (K-M) theory in the cooling cycle. The role played by a phase transformation induced strain on the generation of residual stress is systematically investigated. The volumetric dilation and associated phase fraction form the basis for the calculating of phase transformation strain in the present study. The accomplishment of highest martensitic fraction, i.e., 95 %, produced a phase transformation strain of 7.95 × 10−3 in pulse mode of operation. As a result, reversal of residual stress from tensile to compressive is perceived for pulse-welded specimen. Enrichment of martensitic phase fraction puts the weld surface into a compression state that mitigates the overall tensile residual stress in a welded structure.