Abstract: Objective Aiming to address the susceptibility to undercut defects during laser-arc hybrid horizontal welding, this study investigates the influence mechanisms of laser-wire distance and laser power on molten pool stability and undercut defect formation in an arc-leading configuration. Methods Systematic experiments on laser-arc hybrid horizontal welding were conducted in the arc-leading mode. The effects of the laser-wire distance on the weld bead profile, droplet transfer position, and molten pool stability were analyzed. Furthermore, the mitigating effect of laser power on molten pool instability was evaluated to elucidate the interaction between the laser-wire distance and laser power. Results An excessively short laser-wire distance causes the transferring droplets to directly impinge upon the rear of the keyhole, inducing severe turbulence and intermittent undercutting. Conversely, an excessively large laser-wire distance weakens the thermal coupling between the heat sources, resulting in insufficient filling of liquid metal in the molten pool and a markedly increased probability of undercut defects. Appropriately increasing the laser power significantly suppresses surface fluctuations in the molten pool, improves the fluid flow dynamics, and mitigates undercut formation. The most stable molten pool dynamics and optimal weld bead quality are achieved with a proper laser-wire distance of 3–5 mm combined with an optimized laser power. Conclusion This study elucidates the interactive effects between laser-wire distance and laser power, identifying the optimal process window for stabilizing the molten pool and suppressing undercut defects. These findings provide a theoretical foundation and practical guidance for optimizing laser-arc hybrid welding processes in high-end manufacturing applications.