Shear stress has been recognized as one of the biophysical methods by which to permeabilize plasma membranes of cells. In particular, high pressure transient hydrodynamic flows created by laser-induced cavitation have been shown to lead to the uptake of fluorophores and plasmid DNA. While the mechanism and dynamics of cavitation have been extensively studied using a variety of time-resolved imaging techniques, the cellular response to the cavitation bubble and cavitation induced transient hydrodynamic flows has never been shown in detail. We use time-resolved quantitative phase microscopy to study cellular response to laser-induced cavitation bubbles. Laser-induced breakdown of an optically trapped polystyrene nanoparticle (500nm in diameter) irradiated with a single nanosecond laser pulse at 532nm creates transient shear stress to surrounding cells without causing cell lysis. A bi-directional transient displacement of cytoplasm is observed during expansion and collapse of the cavitation bubble. In some cases, cell deformation is only observable at the microsecond time scale without any permanent change in cell shape or optical thickness. On a time scale of seconds, the cellular response to shear stress and cytoplasm deformation typically leads to retraction of the cellular edge most exposed to the flow, rounding of the cell body and, in some cases, loss of cellular dry mass. These results give a new insight into the cellular response to laser-induced shear stress and related plasma membrane permeabilization. This study also demonstrates that laser-induced breakdown of an optically trapped nanoparticle offers localized cavitation (70 μm in diameter), which interacts with a single cell.