This paper proposes an approach for analyzing the microstructure evolution of laser welding seam by magneto-optical imaging (MOI). The Faraday magneto-optical effect and magnetic domain theory are used to account for the MOI mechanism. The influence of laser welding on the welded joint was inspected by the analysis of color, grayscale and brightness of magneto-optical images. The relation between the brightness of magneto-optical image and grain size of microstructure is discussed as well, and the characteristics of magneto-optical images of weld microstructure were compared with those of scanning electron microscope (SEM) images. Experimental results show that three regions, including the weld zone (WZ), the heat-affected zone (HAZ), and the base metal (BM) are distributed in the magneto-optical image of the welded joint. The MOI method can investigate the microstructure evolution of welded joints and provide a theory and experimental basis for detecting weld defects.