The use of lasers in space is a technology area with plenty of promises for addressing challenges faced by humanity (space debris, space traffic management, planetary defense) and advancing human presence in space (space exploration, propulsion, space resource utilization). However, with this great potential comes an equal amount of risks of its intentional and unintentional misuse. We review both the beneficial and harmful uses of lasers in space and offer an analysis of the main policy challenges for mitigating the risks of misuse. With intent identification, attribution, and dual-use nature of the technology representing the main sources of mutual insecurity, transparency, and information sharing can address them. However, as we outline why the existing international space governance is unlikely to produce new norms on preventing misuse of lasers in space, we turn to discuss the existing practice and the prospects of new non-state actors using them to usher in new international norms for use of lasers in space.