In multi-pass welds, the development of residual stress generally depends on the response of the weld metal, heat-affected zone (HAZ) and nearby parent material to complex thermo-mechanical cycles. Here, the evolution of local material properties and residual stress was investigated for each of these zones during the manufacture of a three-pass groove weld in SA508 steel. Residual stress distributions were measured by neutron diffraction for a sample in which only one weld bead had been deposited, and again for a completed three-pass weld. The evolution of material properties was also characterised by measuring local hardness and conducting tensile tests on small coupons that were extracted from the same welded specimens. Overall, the addition of subsequent weld passes resulted in lower peak tensile residual stresses in the weld as a whole, softening of the HAZ, modest cyclic hardening in nearby parent metal, and some softening in the low-carbon weld metal. © 2012 Acta Materialia Inc. Published by Elsevier Ltd. All rights reserved.