M3:2 high-speed steel (HSS) billets with or without Nb addition were prepared by spray deposition. The effects of Nb and post-thermal-mechanical processing (decomposition treatment and hot forging), as well as heat treatment, on the microstructure and properties of M3:2 HSS were investigated. The microstructure of the as-deposited M3:2 HSS consisted of equiaxed grains with a mean size of approximately 25 μm and discontinuous plate-like M2C and irregular MC carbides distributed along grain boundaries. 0.5% Nb addition can refine the M2C plates and spheroidize MC carbides. With 2% Nb addition, the refined grains with a mean size of approximately 12 μm and continuous net of M6C and a uniform distribution of NbC carbides were obtained. The decomposition of metastable M2C carbides can be accelerated with 0.5% Nb addition due to the refined size and lower thermodynamic stability of M2C plates. With the increased degree of decomposition of M2C carbide, the M6C and MC carbides became refined and more uniformly distributed after optimal thermal-mechanical processing and heat treatment, which leads to a significant increase in bend strength and toughness.