This research contributes to the development of an in-situ laser ultrasonic inspection system to ensure a defect-free fabrication of additive manufacturing (AM) parts. AM process is hailed as one of the most innovative technologies of industry 4.0. due to the many unique advantages over the subtractive manufacturing methods. The increased design freedom due to the layer-wise manufacturing also allows significant weight reductions and enhanced component performance with little or no specialized tooling. However, the lack of understanding of the process makes it prone to defects inhibiting its use in safety-critical applications such as power generation and aerospace industries. In the absence of defects, subtle changes in the process parameters can lead to undesired microstructure that can be detrimental to the part performance. Thus, in-situ material state monitoring techniques are urgently needed to realize the full benefits of additive manufacturing. The majority of the current process monitoring systems are vision-based, limiting them from monitoring the internal defects, and are incapable of providing information about the mechanical properties. X-ray computed tomography is being used extensively to detect volumetric AM defects, but it is not amenable for in-situ inspections and is limited by size. Thus, laser ultrasound is considered as a viable solution for in-situ monitoring of AM as it is non-contact and offers benefits of ultrasonic testing, such as detecting volumetric defects and estimating strength-related properties. This research presents a laser ultrasonic system integrated into a directed-energy-deposition additive manufacturing system and demonstrates the in-situ detection of realistic AM defects and microstructural sensing. Laser generation of both narrowband and broadband Rayleigh waves is exploited to detect localized defects created by altering the process parameters in Ti-6Al-4V depositions. Furthermore, the nonlinear waveform distortion of broadband Rayleigh waves is used to detect changes instilled by marginally varying the process parameters for Ti-6Al-4V and IN718 depositions. The AM surface roughness is a key challenge for laser ultrasound-based in-situ monitoring because it affects both wave reception and the Rayleigh wave propagation. Results demonstrate the influence of AM surface roughness and unique microstructure on nonlinear distortions of Rayleigh waves. Furthermore, the capability of the laser ultrasonic system to carry out artificial flaw detection using narrowband and broadband Rayleigh waves and microstructure monitoring using nonlinear distortion of broadband Rayleigh waves is demonstrated for Ti-6Al-4V and IN-718 specimens within the directed energy deposition additive manufacturing chamber.