Laser welding of AISI 304 stainless steel was carried out by pulsed Nd:YAG laser machine under different welding conditions. Geometrical shape of the joints was circular butt. Studies were focused on laser power, welding velocity, beam diameter and pulse duration. Microstructure of welded joints was investigated by optical microscopy (OM) and scanning electron microscopy (SEM). OM and SEM results show no evidence of grain growth in heat affected zone (HAZ). In addition, columnar and equiaxed grains are observed in the weld metal. Various defects such as lack of fusion, underfill, porosity, hot crack and mismatch are observed as a result of improper welding conditions. The best welding conditions to obtain minimum defects are presented.