The microstructures of deposited TC21 titanium alloy with high strength, high toughness and high damage-tolerance by laser rapid forming (LRF) were studied with Optical Microscopy (OM), Scanning Electronic Microscopy (SEM), X-Ray Diffraction (XRD) and micro-hardness test. The results show that the prior β grains in the deposited TC21 are coarse and columnar for the epitaxial growth with some smaller equiaxed β grains in the top of last layer. Macro-image reveals that two different microstructure areas existed in the deposited TC21: the bright area of acicular martensite located in the last more than 10 layers; and the dark area of basket-weave. By the theory of heat flux in the processing and microstructure transformation, it can be concluded that the basket-weave microstructure is transformed from the initial rapid-solidification martensite of bright area through solid solution and aging treatment by reheat cycles during the LRF process. With the increase of the laser power, the prior columnar β grains become coarser and the α lamellaes in the dark area with basket-weave microstructure grow up. Meanwhile, the micro-hardness keeps constant for the bright area, but descends slightly for the dark area.