Laser ultrasonics is an exciting optical methodology of nondestructive evaluation offering a means of detecting flaws in materials especially in hostile areas where contact transducers cannot function such as high temperature environments or awkward areas where the laser is easily directed by mirrors for rapid scanning and measurement. Typical measurement techniques utilize laser interferometers to accurately measure surface displacements. In this paper the feasibility of applying model-reference signal processing techniques are investigated that would improve the performance of a moderate cost, Michelson interferometric measurement system. A model-reference approach is developed to solve the signal enhancement problem for a laser ultrasonics application in nondestructive evaluation. In this problem a sophisticated laser thermoelastic propagation model is used to predict the surface displacement of the specimen under test. Once synthesized, this model displacement response is used as the reference signal in an optimal (minimum error variance) signal enhancement scheme. Both fixed and adaptive processors are considered in this application where it is shown that a significant improvement in signal levels can be achieved over the usual methods to enhance noisy data acquired from a Michelson interferometric measurement system and increase its overall sensitivity.