Welding generates a considerable amount of residual stresses which affect the structural integrity of welded components. It is often assumed that the magnitude of residual stresses around the welded joint is as high as the yield stress of the material. In this investigation, such assumption was found to be overly conservative and failed to accurately represent the distribution of residual stresses in fibre laser-welded aluminium alloy 2024-T3 sheets. Welding simulation based on the finite element method was used to reliably determine the distribution and magnitude of transient residual stress fields and distortions in thin sheets welded using three different sets of welding parameters. The accuracy of the finite element models was checked by calibrating with experimentally measured weld pool geometries and temperature field prior to conducting parametric studies. X-ray and neutron diffraction measurements were performed on the surface and in the bulk of the welded components, respectively, and compared with numerical results. The influence of weld metal softening, welding parameters and restraints on residual stresses and distortion were investigated systematically by numerically simulating ideal conditions which eliminate the practical limitations of conducting experimental studies, for process optimization as well as evaluation of in-service structure integrity and failure modes of the welded sheets.