Laser cladding is a powerful surface treatment technique that can significantly enhance the properties of metal alloys. This study delves into the liquid phase separation behavior of Cu-Fe-Cr alloys under the rapid solidification conditions inherent in laser cladding and evaluates the influence of 4% Mo and 2% B 4C additions on the resulting alloy characteristics. The intensive undercooling characteristic of the laser cladding process facilitates the alloy’s entry into the liquid-phase immiscibility gap, prompting pronounced phase separation. Our investigation reveals the emergence of Fe-rich regions, exhibiting a variety of shapes, set against a continuous Cu-rich matrix. The incorporation of Mo and B 4C was found to modulate the mixing enthalpy and entropy, thereby refining the phase distribution: Mo was observed to prevent the agglomeration of Fe cores, resulting in a dispersion of isolated Fe cores throughout the Cu-rich matrix, while B 4C promoted a more uniform compositional distribution. This study further enumerates the enhancements in microhardness, wear resistance, and magnetic properties of the alloys. Notably, the Cu-Fe-Cr-Mo-B 4C alloy demonstrated a microhardness exceeding 600 HV, a low coefficient of friction around 0.15, high saturation magnetization, and reduced coercivity. These results underscore the efficacy of laser cladding in tailoring the microstructure and properties of Cu-Fe alloys, providing insights for the controlled manipulation of phase separation to optimize surface characteristics for engineering applications.