The depth-resolved micromodification of single-crystalline femtosecond laser irradiated Nd$^{3+}$ doped MgO:LiNbO$3$ crystals is investigated by means of micro-Raman and microluminescence experiments. We have found that a permanent tensile stress of the order of 2 GPa is induced in the vicinity of ablated volume as a consequence of the pressure-wave propagation due to the thermoelastic relaxation of the laser irradiated material. Microluminescence experiments have revealed that, as a consequence of the permanent laser induced microstress, a localized redshift of the $4F{3/2}$–>$4I_{9/2}$ luminescence band of Nd$^{3+}$ ions also takes place due to a crystal field modification. The analysis of Raman and fluorescence bandwidths indicates that a slight lattice disorder and densification is induced by femtosecond laser irradiation.