The objective of this study is to investigate laser-ultrasonic methods for non-contact detection and characterization of rail defects. Theoretical studies reveal that the most effective wave mode for detecting transverse defects is the shear wave propagating at high angles. Accordingly, a laser ultrasonic detection scheme based on the principle of ultrasonic shadowing is presented and its optimal configuration is studied. The feasibility of this approach is evidenced by the proof-of-concept tests showing the capability of generating and detecting ultrasonic signals for rail specimens with transverse head defects. In addition, a scheme for sizing and locating the flaw is presented. The outcome of the feasibility tests looks promising; the laser method may be implemented as a non-contact NDE method for detecting such flaws as transverse defects masked by longitudinal shells, which are blind to traditional ultrasonic techniques.