In laser materials processing, the direct measurement and characterization of material and process depth is traditionally a diffcult task. This is particularly difficult when such information needs to be obtained in real-time for feedback and dynamic analysis applications. This thesis outlines a novel method and apparatus for real-time depth measurement during laser processes such as welding, drilling, cutting and ablation called inline coherent imaging (ICI). The approach borrows the coherent imaging ideas from the primarily medical field of optical coherence tomography and adapts them to the new application. Without requirements for flawless image quality and limitations on sample exposure the design is free to emphasize speed in acquisition and processing. Furthermore, the imaging optics are specialized for compatibility with off-the-shelf beam delivery systems. Several generations of the imaging technique and relevant design equations are described and shown and realized. Also described is the design and construction of two laser processing stations used for testing ICI in macro- and micro-processing applications. A variety of applications for ICI in the understanding of percussion drilling and welding of metals and other industrial materials are discussed. The imaging technique is further extended to provide manual and fully automatic closed-loop control of drilling and ablation processes in industrial materials. Finally, some important applications of ICI in the processing of bone in both open and closed-loop configurations are demonstrated.