In this paper, we report a system that uses a microsphere to induce a photonic nanojet to directly write on a sample surface with sub-diffraction limit resolution, while simultaneously observing the writing processing in situ. Because of diffraction limit, sub-wavelength laser processing resolution has been difficult to achieve. Recently, we have shown that a microsphere-induced photonics nanojet could be used to create an optical light spot size beyond the diffraction limits, i.e., the diameter of the light spot could be reduced to -200 nm or smaller. This capability could allow a laser (with significant reduction in input power) to pattern nano-scale structures on various substrate materials through the use of microspheres. Many researchers have attempted to use this photonic nanojet (PNJ) based technique to process sub-diffraction limit patterns on all types of materials. However, applying this method to process features at precise locations is very difficult, because the technique requires that a sample being "cut" by the PNJ be observed by a common optical microscope, which cannot resolve features smaller than the optical diffraction limit. This disadvantage limits the applicability of this novel method to nano-scale processing; for example, in trimming resistors in an integrated circuit chip, many circuit components on the chip are much smaller than 200 nm, and not being able to see features beyond the diffraction limit will inadvertently destroy many components while PNJ is used to trim resistive elements. We will show in this paper that processing resolution better than 200 nm is achievable using our laser-based photonic nanojet method, whereas a simultaneous imaging resolution of less than λ/2 could be obtained. Therefore, the method presented in this paper has potential applications in processing sub-diffraction features and bio-specimens in real time with optical information feedback.