Percussion drilling and trepanning are two laser drilling methods. Percussion drilling is accomplished by focusing the laser beam to approximately the required diameter of the hole, exposing the material to one or a series of laser pulses at the same spot to melt and vaporize the material. Drilling by trepanning involves cutting a hole by rotating a laser beam with an optical element or an x–y galvo-scanner. Optical trepanning is a new laser drilling method using an annular beam. The annular beams allow numerous irradiance profiles to supply laser energy to the workpiece and thus provide more flexibility in affecting the hole quality than a traditional circular laser beam. Heating depth is important for drilling application. Since there are no good ways to measure the temperature inside substrate during the drilling process, an analytical model for optical trepanning has been developed by considering an axisymmetric, transient heat conduction equation, and the evolutions of the melting temperature isotherm, which is referred to as the melt boundary in this study, are calculated to investigate the influences of the laser pulse shapes and intensity profiles on the hole geometry. This mathematical model provides a means of understanding the thermal effect of laser irradiation with different annular beam shapes. To take account of conduction in the solid, vaporization and convection due to the melt flow caused by an assist gas, an analytical two-dimensional model is developed for optical trepanning. The influences of pulse duration, laser pulse length, pulse repetition rate, intensity profiles and beam radius are investigated to examine their effects on the recast layer thickness, hole depth and taper. The ray tracing technique of geometrical optics is employed to design the necessary optics to transform a Gaussian laser beam into an annular beam of different intensity profiles. Such profiles include half Gaussian with maximum intensities at the inner and outer surfaces of the annulus, respectively, and full Gaussian with maximum intensity within the annulus. Two refractive arrangements have been presented in this study. Geometric optics, or ray optics, describes light propagation in terms of rays. However, it is a simplification of optics, and fails to account for many important optical effects such as diffraction and polarization. The diffractive behaviors of this optical trepanning system are stimulated and analyzed based on the Fresnel diffraction integral. Diffraction patterns of the resulting optical system are measured using a laser beam analyzer and compared with the theoretical results. Based on the theoretical and experimental results, the effects of experimental parameters are discussed. We have designed the annular beam shaping optical elements and the gas delivery system to construct an optical trepanning system. Laser drilling experiments are performed on the Stainless Steel-316 (SS 316) plate and the Inconel 718 (IN 718) plate. The geometry of the trepanning holes with different sizes is presented in this study.