A three-dimensional finite element model was developed to predict the temperature distribution and phase transformation in deposited stainless steel 410 (SS410) during the Laser Engineered Net Shaping (LENS™) rapid fabrication process. The development of the model was carried out using the SYSWELD software package. The model calculates the evolution of temperature in the part during the fabrication of a SS410 plate. The metallurgical transformations are taken into account using the temperature-dependent material properties and the continuous cooling transformation diagram. The ferritic and martensitic transformation as well as austenitization and tempering of martensite are considered. The influence of processing parameters such as laser power and traverse speed on the phase transformation and the consequent hardness are analyzed. The potential presence of porosity due to lack of fusion is also discussed. The results show that the temperature distribution, the microstructure, and hardness in the final part depend significantly on the processing parameters.