The objective of the study is to provide a novel method and system that is used to inspect the fatigue defects of the rail in a non-contact way. A laser-electro magnetic acoustic transducer (EMAT) system is designed in Laser Institute of Shandong Academy of Sciences, which is used in the present work. Artificial surface cracks and holes with different sizes are prepared on the rail. The principle of mode conversion is applied to determine the defects above. Namely, Rayleigh wave generated by line laser source becomes shear wave when the Rayleigh wave passes the surface defect. To receive the defect signal in a noncontact way, an EMAT sensor is used in this work. Experimental results show that the amplitude of defect signal increases with the increase of defect depth. To avoid the influence of noise on the testing result, the ultrasonic signal of surface defect is processed by wavelet soft-threshold filter designed by Matlab. The signal to noise ratio increases by 12 dB at least. The results show that the laser-EMAT technique has good prospects in the engineering applications of rail testing.