Cavitation damage, evolution, and features with time are serious problems confronting designers and users of high-speed hydraulic machines. The stepwise erosion technique clarifies the evolution of cavitation damage and its features over time. The technique involves exposing a test sample to repeated very low durations of erosion, followed by accurate relocation in the SEM. This allows fora detailed study of the actual wear processes within a material, providing a solid foundation for understanding material failure. The experiments were conducted using an ultrasonic vibratory horn functioning at 19.5 kHz frequency and 50 µm ± 0.2 um peak-to-peak amplitude. The tested material was cold-rolled austenitic stainless steel SUS 304 (18 Cr-8 Ni). The results show that the slip bands formed due to shock waves’ impact are the preferential sites for early material removals. Material removal starts gradually along the slip bands that form at the grain boundary and then progresses into the grain. The results also showed that the microjets formed pits that were a few micrometers in size and separated from one another. These pits have remained the same shape and size over time, confirming their limited role in the evolution of cavitation damage. The initiation and progression of inherent cracks resulting from plastic deformation, as well as the characteristics of dislodged particles, strongly support the conclusion that shockwave impacts cause fatigue failure as the mechanism of cavitation erosion.