A Magneto-Optic (MO) system is being utilized in aerospace industry for the detection of surface defects. To extend the capability of the instrument to detect and quantify sub-surface defect, we present a new Magneto-Optic (MO)/Pulsed Eddy Current (PEC) imaging system which, supported by laser, is being used for testing fine defects beneath precision surface of mental materials. The technique is based on the combination of pulsed eddy current excitation and magneto-optic sensing and imaging. In the experimental set-up, the induction of eddy currents is conventionally performed by pulsed current excitation coil over the object surface. The magnetic field induced by the pulsed eddy currents is detected by using Faraday effect. For this target, a laser beam passes through a special crystal, Faraday rotation glass (FRG), which has its easy axis of magnetization in the direction of normal magnetic fields and memory effect, integrated in the excitation coil. The polarization direction of laser beam is rotated in crystal depending on local magnetic field. The area distribution of rotation angle caused by fine defects beneath precision surface is transformed into "light" or "dark" picture using an optical set-up, which consists of a conventional microscope, a lighting, a polarimeter, and a CCD sensor. In the paper, the basic principle, configuration of the test equipment and image processing are described, and an original experimental results of fine artificial defects beneath precision surface of mental materials is presented.