The deposition characteristics of YBa2Cu3O7 thin films formed by pulsed laser evaporation (PLE) method have been found to be significantly different from films obtained by other vaporization methods primarily because of very high evaporation flux which absorbs the incoming laser irradiation. Based on the experimentally obtained deposition characteristics, the physics of the PLE process is analyzed, and a hydrodynamic gas expansion model is proposed for the PLE process. In this model, the laser generated partially ionized plasma, initially under high temperature and pressure, expands anisotropically into vacuum. The plasma expansion characteristics determine the nature of the deposition process. Solutions governing the plasma expansion are obtained, and the calculated deposition characteristics are compared with results obtained on PLE deposited YBa2Cu3O7 films on silicon substrates. This model is able to explain most of the salient features of the pulsed laser deposition technique. The non-equilibrium nature of the PLE technique has been utilized for in-situ fabrication of superconducting YBa2Cu3O7 thin films on (100) SrTiO3, (100) YS-ZrO2, and (100) LaA1O3 substrates in the temperature range of 500-650°C. A positively biased ring between the substrate and the target has been found to reduce the processing temperatures to 500°C, although the epitaxial quality of the films deteriorated considerably below 550°C. The films formed on lattice matched SrTiO3 and LaA1O3 substrates are virtually defect-free with minimum channeling yields values equal to the single crystal value. Critical current densities values over 6.0 x 106 amps/cm2 (at 77 K and zero magnetic field) were obtained for epitaxial silver doped films YBa2Cu3O7 films on (100) LaA1O3 substrates. The effect of the processing parameters on the superconducting properties and microstructure of thin films is discussed in detail.