Abstract: Based on theoretical analysis of indentation process, the test principle and method of residual stress were studied in terms of energy method. The work residual stress did in the indentation process can be derived through the tensor decomposition, and the effect of residual stress on indentation was summarized on the basis of finite element simulation. According to relationship between work and energy, an analytical model between indentation work and the residual stress, and a derived formula of residual stress were established. The results show that residual stress had a large impact on the initial process of the indentation loading, while it had little influence on the second half of the loading and unloading, which was negligible. The impact of tensile stress was greater than that of pressure stress on indentation process. The loading in indentation process can be considered an elastic-plastic deformation process, while the unloading was only an elastic deformation process. The calculated residual stress in accordance with established residual stress model was accurate and reliable, which can be used for the test of residual stress.