HfO₂/SiO₂ periodic multilayer high reflection mirrors have been prepared by a reactive electron-beam evaporation technique. The deposited mirrors were annealed in the temperature range from 300°C to 500°C. The effects of annealing on optical, microstructural, and laser-induced damage characteristics of the mirrors have been investigated. The high reflection band of the mirror shifts toward a shorter wavelength with increasing annealing temperature. As-deposited and annealed mirrors show polycrystalline structure with a monoclinic phase of HfO₂. Crystalinity and grain size increase upon annealing. The laser-induced damage threshold (LIDT) has been assessed using a 532 nm pulsed laser at a pulse width of 7 ns. The LIDT value of the multilayer mirror increases from 44.1 J/cm² to 77.6 J/cm² with annealing up to 400°C. The improvement of LIDT with annealing is explained through oxygen vacancy defects as well as grain-size-dependent thermal conductivity. Finally, the observed laser damage morphology, such as circular scalds and ablated multilayer stacks with terrace structure, are analyzed.