In fabrication industries residual stresses and distortion of welded steel continues to be a major problem. Though many works has been done in the past to assess residual stress in conventional welding, very few works has been done for the case of laser welding. This paper investigates the effects of welding speed, laser power, work piece thickness and work piece width on residual stress and distortion of the workpiece using Finite Element Analysis code ABAQUS. Transient 3-D FEA has been carried out following a two-step approach. In the first step a non-linear heat transfer analysis is carried out find the dynamic temperature distribution. Subsequently an elasto-plastic analysis is performed to compute the residual stress and distortion arising out of the transient temperature field. A moving Gaussian heat source is assumed at top surface. Convection and radiation heat losses are considered at all the surfaces. Based on the simulation results, distortion and residual stress of the weldment are predicted. Thus, the experimental analysis, which might be costly, can be avoided. A few pertinent observations obtained from the simulation are given below. With increase in laser power residual stresses and distortion increase. On the other hand, as the speed increases distortion and residual stress decrease. As the thickness of the job increases there is a reduction of residual stress and distortion. Similarly, as the width of the job increases there is a reduction of residual stress and distortion.