The present work demonstrates the development of a peening technique using small-diameter cavitation bubbles with a narrow nozzle, which has been considered difficult in the past. In addition, an apparatus capable of measuring sonoluminescence intensity was employed. With this technology, it has become possible to impart compressive residual stress and various mechanical functions to the surface of a sample using relatively small tabletop equipment. Applying a magnetic field to a WJ cavitation system employing a narrow nozzle activated collisions between bubbles due to the Lorentz force acting in the direction perpendicular to the flow. Collisions between bubbles were promoted as a result of multiphoton ionization inside the bubbles due to the laser irradiation. This effect, in turn, reduced the rate of motion of the bubbles, lowered the Blake threshold and facilitated MFC at high temperatures and pressures. Consequently, the application of compressive residual stress to a metal surface became possible and a peening phenomenon was achieved. Cavitation in conjunction with a narrow nozzle generated small bubbles. The concentration of various energy sources at the cavitation cloud greatly increased the number of bubbles along with the processing pressure. Furthermore, the concentration of energy raised the bubble temperature such that the surface of a rolled sheet of the AZ31B magnesium alloy could be processed while limiting the surface roughness.