Cavitation impact from a cavitation jet, which is formed from bubbles induced by a high-speed water jet in water, can be used for surface modification in a similar manner to shot peening. A cavitating jet is normally produced by injecting a high-speed water jet into a water-filled chamber. It is possible to make a cavitating jet in air by injecting a high-speed water jet into a concentric low-speed water jet that surrounds the high-speed jet. In order to demonstrate this, a high-speed water jet with a concentric low-speed water jet was impacted onto an aluminum specimen to observe the pattern of erosion. The mass loss of the specimen was weighed to measure the capability of the jet, since a more powerful jet produces a larger mass loss. It was shown that the combination of high- and concentric low-speed water jets produced a typical erosion pattern such as that obtained using a cavitating jet in a water-filled chamber. When the injection pressure of the concentric low-speed water jet was optimized, the capability of the cavitating jet in air was much greater than that of a cavitating jet in a water-filled chamber. It was demonstrated that an optimized cavitating jet in air introduced more compressive residual stress in the surface of tool steel alloy than that from a cavitating jet in a water-filled chamber. In addition, this stress was larger than that induced by shot peening. The peened surface was also less rough compared with shot peening.