We present the results of a crystallization study on NiTi shape memory thin films in which amorphous films are annealed by a scanning laser. Laser annealing makes it possible to spatially distributed shape memory properties in thin-film devices, e.g., amorphous or passive elements can be created in parallel with crystalline or active elements to effect in-plane actuation. A kinetics study shows that nucleation of the crystalline phase occurs homogenously in the films. Consequently, the laser annealing process produces polycrystalline films with a random crystallographic texture. The crystallized films have a uniform microstructure across the annealed areas. The material in the crystalline regions transforms reversibly to martensite on cooling from elevated temperature and stress measurements show that a significant recovery stress is achieved in the films upon transformation. Temperature profiles induced in the film by the scanning laser were calculated using a full three-dimensional finite element model. The model takes into account oxidation of the NiTi surface and allows prediction of the size of the crystallized regions as a function of laser annealing parameters.