Laser microwelding has become a significant industrial process, because there are many outstanding advantages in using laser welding as the bonding method over other widely used bonding technologies. As an alternative to the common adhesives or solders used for the joining process, laser welding offers a number of attractive features such as high weld strength to weld size ratio, reliability, and a minimal heat-affected zone (HAZ). These provide the benefits of low heat distortion, a non-contact process, repeatability, and ability to automate. Therefore, the applications of laser microwelding have been broadened, especially in the microelectronic and packaging industry, in recent past decades. Quality of the laser microwelding, however, depends on a number of parameters such as the characteristics of the laser beam, environmental conditions, and properties of the workpiece. Furthermore, the large temperature gradients occur during laser microwelding process leads to a high stress level, and might result in many undesirable phenomena such as the high level of residual stresses in the vicinity of the heat-affected zone (HAZ) that adversely affect the life time of the component. Numerous studies have been performed on the evaluation and prediction of the thermal stresses in laser microwelding process. However, it is very difficult to measure the thermal stresses, and to predict the magnitude and direction of thermal stress/deformation. Therefore, we develop an optical methodology, based on opto-electronic holography (OEH) technique, to measure and evaluate the thermal stresses/deformations non-destructively. In this paper, the system of OEH measurement of the thermal deformation of the laser welds will be described in details, and representative results will be included. In addition, analytical and computational models will also be developed to simulate the temperature field and thermal stresses/deformations in laser microwelding. Continued work will lead to novel measurement system for monitoring the thermal stresses/deformations during the process of laser microwelding, which will help optimizing efficient and effective laser micro-machining processes for applications in microelectronics and packaging.