Laser welding of advanced high strength steels for fabrication of tailor welded blanks is of increasing interest for continued improvements in vehicle performance and safety without an increase in weight. Experimental results have shown that formability of welded dual-phase (DP) steels is significantly reduced by the formation of a softened region in the heat-affected zone (HAZ). In this study, a finite element simulation of welded DP980 samples undergoing transverse uniaxial tensile testing was used to evaluate the effects of soft zone width and strength on formability characteristics. Both the strength and the ductility of laser welded blanks decreased compared with those of unwelded blanks due to the formation of a softened outer-HAZ, where strain localization and final fracture occurred during tensile testing. The magnitude of softening and the width of the HAZ depend on the laser specific energy. It was observed from tensile test experiments and numerical simulations that both a decrease in strength and an increase in width of the softened HAZ were responsible for a decrease in the overall strength and ductility of the welded blanks.