With the implementation of more stringent emissions standards, ultrahigh strength steel has been increasingly used in vehicle body to reduce the carbon emissions, but softening in the heat-affected zone is one of the most serious issues faced with in welding of this steel. In this paper, a finite element model (FEM) was developed to estimate temperature distribution in laser welding of lapped martensitic steels M1500 considering the effect of interface. Three methods to characterize the effect of interface have been adopted. The comparison result shows that the method using two groups of contact elements with birth and death options could accurately characterize the thermal contact conductance properties of the interface before and after welding, respectively. Based on the simulated temperature–time curve, a carbon diffusion model was then developed to estimate the martensite tempering transformation in the softening zone. Maximum softening degree and location of the softening zone were estimated and validated by hardness measurement experiments.