The structural integrity of a welded structure depends mainly on the performance of the welded joints. Due to the welding process, the mechanical properties of the structure change and different regions are created in the weldment. The mechanical properties of welded joints change significantly around the heat affected zone (HAZ). So to predict stress distribution around the weld, these changes should be considered in the finite element model (FEM) of the welded structure. In this research, the changes of mechanical properties around the welded joint were experimentally tested and used to develop a FEM model of a welded joint which can predict the stress behavior around the weld. First, an experimental analysis was carried out on an ASTM standard arc welded joint of stainless steel specimen to observe the microstructural change in the HAZ. This enables to find out the HAZ width using an optical microscope. Moreover, a tensile testing was performed to investigate the change of Young’s modulus of the HAZ compared to the base metal (BM). Another experimental analysis was also performed on a real arc welded structure of the same material to observe its’ strain distribution around the HAZ. The HAZ width and Young’s modulus obtained from the experimental testing were then applied to generate the FEM model of an ASTM standard arc welded joint as well as a real arc welded structure of stainless steel. The finite element analysis (FEA) results of stress distribution around the weld joint in both cases show a good agreement with the experimental results. Therefore, the developed material property based FEM model can predict the stress behavior of similar type of structures with the same welding process on the same material studied in this research.