This investigation was carried out to study the effect of a novel process of surface modification, surface nanostructuring by ultrasonic shot peening, on osteoblast proliferation and corrosion behavior of commercially pure titanium (c p-Ti) in simulated body fluid. A mechanically polished disc of c p-Ti was subjected to ultrasonic shot peening with stainless steel balls to create nanostructure at the surface. A nanostructure (<20 nm) with inhomogeneous distribution was revealed by atomic force and scanning electron microscopy. There was an increase of approximately 10% in cell proliferation, but there was drastic fall in corrosion resistance. Corrosion rate was increased by 327% in the shot peened condition. In order to examine the role of residual stresses associated with the shot peened surface on these aspects, a part of the shot peened specimen was annealed at 400°C for 1 hour. A marked influence of annealing treatment was observed on surface structure, cell proliferation, and corrosion resistance. Surface nanostructure was much more prominent, with increased number density and sharper grain boundaries; cell proliferation was enhanced to approximately 50% and corrosion rate was reduced by 86.2% and 41% as compared with that of the shot peened and the as received conditions, respectively. The highly significant improvement in cell proliferation, resulting from annealing of the shot peened specimen, was attributed to increased volume fraction of stabilized nanostructure, stress recovery, and crystallization of the oxide film. Increase in corrosion resistance from annealing of shot peened material was related to more effective passivation. Thus, the surface of c p-Ti, modified by this novel process, possessed a unique quality of enhancing cell proliferation as well as the corrosion resistance and could be highly effective in reducing treatment time of patients adopting dental and orthopedic implants of titanium and its alloys.