Improving the strength of an object by surface treatment inevitably trades off strength and ductility, and also reduces toughness. In this study, carbon steel was treated by a surface modification technique, referred to as multifunction cavitation technology (MFC), and the improvement of strength and toughness was investigated. Peening marks, pits, and rust were observed in the MFC-treated carbon steel as the processing time increased. In addition, the surface roughness of MFC-treated carbon steel increased and the surface potential decreased. The residual stress and hardness of the MFC-treated surface increased the processing time to 5 min, but gradually decreased after that. A Charpy impact test was performed to evaluate toughness. The transition region between the untreated material and the MFC-treated material after the Charpy impact test was 280 to 380 K. The MFC-treated material had a lower transition temperature and higher absorption energy than the untreated material, so it was effective in improving toughness.