Cast iron is relatively cheap and highly machinable and is thus used for various mechanical parts. However, cast iron (H2 grade) is a high-carbon steel that shows cracks or craters owing to the martensitic transformation during conventional surface heat treatments. In this study, we investigated electron-beam (e-beam)-based direct preheating for preventing the formation of craters and cracks during the heat treatment of cast iron using a plasma diode e-beam. Scanning electron microscopy, X-ray diffraction analysis, energy-dispersive X-ray spectroscopy, and hardness measurements were performed to elucidate the crater and crack formation mechanism. Craters were formed within the graphite phase, owing to the low-melting-point elements and compounds. It was also observed that crack and crater formation was correlated to the distortion of the primary gamma phase, based on a significant decrease in the d-spacings. The direct preheating process resulted in a lower degree of distortion of the gamma phase. As a result, we could achieve a hardness as high as 800 HV without cracks or craters in cast iron, which is a cheap material. Moreover, the results of potentiodynamic polarization tests showed that the corrosion resistance increased after the surface treatment, owing to the removal of the low-melting-point impurities and grain refinement.