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The relationship between the microstructures and cryogenic mechanical properties of the dissimilar laser welded joint between ultra-low carbon 5% Ni steel (SA645) and 304L stainless steel (AISI304L) was investigated to identify the crucial microstructural characteristics determining the low-temperature toughness of the joint. The microstructural constituents of the weld metal were changed by varying the laser beam offset towards AISI304L side. The low-temperature (−120 °C) impact energy of the weld without beam offset which consisted of full lath martensite was only 10.22 J. High-density tangled dislocations in lath martensite resulted in the embrittlement of the weld metal. With increase in the offset of laser beam, the cryogenic toughness of the weld with a dual microstructure of lath martensite and retained austenite (RA) was enhanced more than seven times (72.16 J). Areas with relatively low strain/stress caused by the strain-induced martensite transformation of RA were observed near the crack propagation path, which deflected crack propagation path and increased the resistance of crack propagation. However, the weld metal with a triplex microstructure of martensite, RA and δ-ferrite exhibited a lower cryogenic impact toughness (37.15 J) despite the high volume fraction of RA when the beam offset was high. The thermal stability of RA decreased significantly owing to the weakening of restrain effect of surrounding martensite. The improvement effect of RA on cryogenic toughness was attenuated due to the decreased thermal stability of RA and the occurrence of δ-ferrite. Research results indicate that the volume fraction and stability of RA and the existence of δ-ferrite with increasing the laser beam offset were confirmed as the pivotal microstructural factors determining the cryogenic impact toughness. • The cryogenic impact toughness of the weld was enhanced by the strain-induced martensite transformation of RA. • The restrain effect of surrounding martensite played a dominant role in the thermal stability of RA. • The content and thermal stability of RA were the pivotal microstructural factors determining cryogenic toughness of the weld. • The existence of δ-ferrite was also crucial factor affecting cryogenic toughness of the weld when beam offset was high. [ABSTRACT FROM AUTHOR]