Laser material deposition based restoration of high-value components can be a revolutionary technology in remanufacturing. The deposition process induces residual stresses due to thermomechanical behavior and metallurgical transformations. The presence of tensile residual stresses in the deposited layer will compromise the fatigue life of the restored component. We have developed a novel fully coupled metallurgical, thermal and mechanical (metallo-thermomechanical) model to predict residual stresses and identified a critical deposition height, which ensures compressive residual stresses in the deposited layer. Any lower deposition height will result in tensile residual stresses and higher deposition height will result in excessive dilution (substrate melting). We have validated the model using neutron and micro-focus X-ray diffraction measurements. This study highlights that the critical deposition height corresponds to the minimum cooling rate during solidification. It addresses one of the major outstanding problems of additive manufacturing and paves a way for “science-enabled-technology” solutions for sustainable restoration/remanufacturing.