This study focuses on the ultrafast improvement of surface wettability, electrical, and room temperature magnetic characteristics of cubic zirconia single crystalline thin films after laser annealing. The point defects generated by the laser treatment are envisaged to play a critical role in altering the above properties. Yttria stabilized zirconia (YSZ) thin films were epitaxially grown on Si(100) substrates by pulsed laser deposition technique and subsequently annealed by a KrF excimer laser beam (τ = 25 ns) using low-energy laser pulses. An atomically sharp interface, parallel to the film free surface, between laser annealed layer and the pristine region was observed. The single crystalline nature of thin films was preserved following the laser treatment. The laser-solid interaction with YSZ led to the introduction of point defects, i.e., oxygen vacancies, resulting in a strained structure which, in turn, resulted in the formation of a tetragonal-like zirconia. With the increase of number of laser pulses the laser treated films got highly disordered due to the high concentration of the point defects, while maintaining their crystalline nature. Although the surface of the pristine sample showed weak hydrophilic characteristics (contact angle ∼ 73°), the laser annealed samples exhibited significantly improved hydrophilic characteristics. It was found that there is an optimum number of laser pulses where the maximum hydrophilicity (contact angle ∼ 22°) is obtained. The carrier concentration in the sample with the highest hydrophilicity was determined to be higher by about 5 orders of magnitude compared to the pristine sample. This sample possessed the lowest electrical resistivity. The laser annealed YSZ epilayers showed a superior room-temperature ferromagnetic behavior, compared to the pristine samples. A 2-fold enhancement in the magnetization of the samples was observed following the laser treatment which is a clear demonstration of the key role of defects and their transient distribution throughout the lattice. All these observations were correlated with the formation of point defects due to the photon interaction with YSZ and absorption of energy of the KrF laser photons to produce defects.