Laser cladding technology was used to prepare TiC particle-reinforced Fe-based composite coatings on 304 stainless steel to improve its surface properties. The effects and reasons of laser power on the geometrical microstructure characteristics and hardness of the cladding layer were investigated. The microstructure characteristics of the cladding layer were comprehensively characterized by grey relational analysis. The height, porosity, and content of unmelted TiC particles reduced as laser power rose, whereas the width, depth, dilution rate, and secondary dendrite arm spacing of precipitated TiC increased. The amount of precipitated TiC increased and then decreased, whereas the secondary dendrite arm spacing of the matrix decreased and then increased, reaching their maximum and lowest points at 1800 W, respectively. The surface of the cladding layer is well-formed when the laser power reaches 1800 W. It has a well-balanced microstructure and the grey relational grade is maximum. The cladding layer has an average hardness of 801.5 HV_0.5, which is roughly 4.5 times that of the substrate. In addition, the dissolving mechanisms of TiC particles during the laser cladding process were deduced. There are two dissolving mechanisms for TiC particles, which are distinguished by outward-inward and integral decomposition. Both processes work together to cause TiC particles to dissolve completely.