Funding from a NSF-ILI grant has been used to establish an Optics and Laser Demonstration Laboratory at Murray State University. This facility is proving to be very versatile, with experiments and demonstrations supporting undergraduate courses in geometrical and physical optics, modern physics, and an advanced laboratory instrumentation course. The lab includes a CCD camera system which is used by upper level students to investigate diffraction effects, signal/noise ratios of detection systems, and efficiency of binary optical elements. Also, the lab supports two new courses which have been developed to accompany the grant. One course, Laser Physics, is for upper level physics majors, while the second course, Light and Lasers in Action, will use optical phenomena to introduce physical concepts to non-majors of various disciplines. The lab is receiving recognition as the centerpiece for departmental outreach into the public schools. Local elementary, middle, and high school classes visit the lab on field trips and are given demonstrations in optics and lasers. Faculty also transport lab equipment to area schools for demonstrations, and have loaned equipment to schools for use in the classroom and at science fairs. The content, activities, and reception of the lab are described.