From the viewpoint of the device performance, the fabrication and patterning of oxide–metal–oxide (OMO) multilayers (MLs) as transparent conductive oxide electrodes with a high figure of merit have been extensively investigated for diverse optoelectronic and energy device applications, although the issues of their general concerns about possible shortcomings, such as a more complicated fabrication process with increasing cost, still remain. However, the underlying mechanism by which a thin metal mid-layer affects the overall performance of prepatterned OMO ML electrodes has not been fully elucidated. In this study, indium tin oxide (ITO)/silver (Ag)/ITO MLs are fabricated using an in-line sputtering method for different Ag thicknesses on glass substrates. Subsequently, a Q-switched diode-pumped neodymium-doped yttrium vanadate (Nd:YVO4, λ = 1064 nm) laser is employed for the direct ablation of the ITO/Ag/ITO ML films to pattern ITO/Ag/ITO ML electrodes. Analysis of the laser-patterned results indicate that the ITO/Ag/ITO ML films exhibit wider ablation widths and lower ablation thresholds than ITO single layer (SL) films. However, the dependence of Ag thickness on the laser patterning results of the ITO/Ag/ITO MLs is not observed, despite the difference in their absorption coefficients. The results show that the laser direct patterning of ITO/Ag/ITO MLs is primarily affected by rapid thermal heating, melting, and vaporization of the inserted Ag mid-layer, which has considerably higher thermal conductivity and absorption coefficients than the ITO layers. Simulation reveals the importance of the Ag mid-layer in the effective absorption and focusing of photothermal energy, thereby supporting the experimental observations. The laser-patterned ITO/Ag/ITO ML electrodes indicate a comparable optical transmittance, a higher electrical current density, and a lower resistance compared with the ITO SL electrode.