Optofluidic devices have revolutionized the manipulation and transportation of fluid at smaller length scales ranging from micrometers to millimeters. We describe a dedicated optical setup for studying laser-induced cavitation inside a microchannel. In a typical experiment, we use a tightly focused laser beam to locally evaporate the solution laced with a dye resulting in the formation of a microbubble. The evolving bubble interface is tracked using high-speed microscopy and digital image analysis. Furthermore, we extend this system to analyze fluid flow through fluorescence-Particle Image Velocimetry (PIV) technique with minimal adaptations. In addition, we demonstrate the protocols for the in-house fabrication of a microchannel tailored to function as a sample holder in this optical setup. In essence, we present a complete guide for constructing a fluorescence microscope from scratch using standard optical components with flexibility in the design and at a lower cost compared to its commercial analogues.