Dual-phase steels are being applied in the automobile sectors for their higher strength with reasonable work hardening exponent. However, applications of these steels in tailor welded blanks for automobile part manufacturing involve laser welding and subsequent sheet forming. The thermal cycle during laser welding changes the local properties of the weld zone, which affects the formability. Hence, the present study was targeted to understand the effect of laser welding in formability of dual-phase steel. Laser welding of 1.2-mm-thick dual-phase steel with tensile strength of 600 MPa (DP600) and 980 MPa (DP980) was performed using 2-kW fibre laser set-up to fabricate two different laser welded blanks. The laser power and scan speed during welding were selected as 1.8 kW and 1000 mm/min, respectively. Weld quality was accessed using microhardness, metallography and transverse tensile tests. Formability of the laser welded blanks was evaluated in terms of cup height by Erichsen cupping test. It was observed that formability of welded blanks reduced compared to parent metals. The soft zone was observed in the heat-affected zone of DP980 welded specimens, and hence, reduction in formability was more. Finite element simulation of Erichsen cupping test was performed using LS-DYNA explicit finite element code.