Pulsed laser heating of metals causes an excessive temperature gradient across the heated zone, which in turn results in thermal stresses developing in the heated region. In the present study, gas-assisted pulsed laser heating of steel is simulated. The governing flow, energy and thermal stress equations are solved numerically. The low Reynolds number k-ε model is introduced to account for the turbulence. In the analysis, temporal variation in heating and stress development are considered. In order to examine the material response to the heating pulse, constant and variable properties of the workpiece are taken into account. It is found that the thermal stresses are highly concentrated in the surface region of the substrate. The radial component of the stress is compressive while the axial component is tensile. The maximum equivalent strain is of the order of 10−3. The maximum equivalent stress occurs below the surface along the z axis, where the radial intersection is the centre of the heated spot.