The well-known thermo-elastic effect of laser irradiation can be exploited to produce strong localized stresses when an expanded, long pulse, low-intensity laser beam is used to irradiate the specimen. These stresses will produce a parametric modulation of the received ultrasonic signals, that is somewhat similar to the acousto-elastic effect often used in nonlinear ultrasonic studies. It is shown in this paper that otherwise hidden small cracks in fatigue-damaged aluminum and titanium specimens can be readily detected by exploiting this optically induced thermo-elastic modulation during ultrasonic surface wave inspection since they are susceptible to crack closure and therefore exhibit strong parametric modulation. The temporal and spatial variations of the ultrasonic signals due to laser irradiation were evaluated numerically and experimentally. Based on these results, the direct temperature modulation of the ultrasonic velocity can be separated from the thermo-elastic stress modulation present only in cracked specimens. It was found that this method can be used to selectively increase the sensitivity of ultrasonic flaw detection to small fatigue cracks by more than one order of magnitude.