Abstract: An improved laser diode assembly includes a laser diode unit which is mounted directly on a compact thermoelectric cooler, which is mounted on a heat sink. A thermally insulating gasket, mounted around the thermoelectric cooler, seals the thermoelectric cooler from the ambient environment, thereby preventing condensation from forming on the cold face of the thermoelectric cooler. A bushing concentrically positions the laser diode unit in the proper optical alignment with respect to the optical assembly, while thermally and electrically insulating the laser diode. A thermally conductive gasket, mounted around the circumference of the laser diode window, returns heat from the heat sink to the window to prevent condensation from forming on the window. The laser diode is the only component cooled by the thermoelectric cooler. Since a portion of the heat transferred by the thermoelectric cooler is utilized to warm the laser diode window, a separate heating element is not required.