This paper looks into the influences of martensitic transformations on the cavitation-erosion (CE) damage initiation mechanism and pitting corrosion resistance of a lean austenitic stainless steel. The ε and α’ martensites are prime sites of CE damage initiation for this steel, whereas grain boundaries are more favourable damage initiation sites for other similar steels. The profusion of ε and α’ results in fast surface roughening during the CE process, which may cause a compromise in performance when this steel (or similar steels that have the same CE damage mechanism) is used such applications as hydro-machinery or piping. ε and α’ also detrimentally affect the pitting resistance of this steel and so they are expected to affect CE resistance adversely due to the synergism between CE and corrosion.