We report on the effect of a new laser annealing treatment for thin film CdTe solar cells using a 808 nm diode laser. As-deposited, laser annealed and MgCl2 treated/laser annealed CdTe thin films have been analysed. One part of the work has been focused on understanding the efficacy of the activation treatment by laser annealing. The results show partial chlorine diffusion and associated partial re-crystallisation of the absorber. The second part of this work has been focused on the effect of the treatment on the chemical composition of the CdTe surface. It has been found that the process also contributes to the formation of a Te-rich layer on the surface of the CdTe absorber, which may provide a useful process to produce a back contact. This paper reveals the effect of the laser treatment on the micro-structural properties of the CdTe absorber material. The microstructure has been analysed using STEM/EDX, HRTEM and XRD. Further work is required to optimise the process but it has the potential to provide much greater control than current activation methods and also to provide a Te back contact suitable for CdTe solar cells.