Directed energy deposition with laser beam (DED-LB) components experience significant residual stress due to rapid heating and cooling cycles. Excessive residual tensile stress can lead to cracking in the deposited sample, resulting in service failure. This study utilized digital image correlation (DIC) and thermal imaging to observe the in situ temporal evolution of strain and temperature gradients across all layers of a deposited 316 L stainless steel thin wall during DED-LB. Both continuous-wave (CW) and pulsed-wave (PW) laser modes were employed. Additionally, the characteristics of thermal cracks and geometric dislocation density were examined. The results reveal that PW mode generates a lower temperature gradient, which in turn reduces thermal strain. In CW mode, the temperature–stress relationship curve of the additive manufacturing sample enters the “brittleness temperature zone”, leading to the formation of numerous hot cracks. In contrast, PW mode samples are almost free of cracks, as the metal avoids crack-sensitive regions during solidification, thereby minimizing hot crack formation. Overall, these factors collectively contribute to reduced residual stress and improved mechanical properties through the adjustment of pulsed-wave laser deposition.