Advancements in additive manufacturing (AM) have accelerated research on multi-materials. Among metal AM techniques, laser powder-bed fusion (L-PBF) stands out for its precision and suitability for lab-scale studies, making it the primary platform for multi-material AM research. However, fusion-based AM processes such as L-PBF face persistent challenges when combining dissimilar alloys, primarily due to the metallurgical incompatibility of alloy pairs. While systems with high solubility are generally easier to process, compound-forming pairs tend to crack due to the formation of brittle intermetallics. Similarly, immiscible systems are prone to poor metallurgical bonding and interfacial cracking. However, the mechanisms underlying the behavior of immiscible systems remain insufficiently addressed, as most insights are derived from ex situ and post-mortem characterization, often resulting in conflicting interpretations. To address this gap, enhancements were made to the miniature L-PBF machine (MiniSLM) originally developed for operando X-ray investigation of the L-PBF process at synchrotron beamlines. The modified setup and newly developed experimental procedures enabled real-time observation of multi-material L-PBF. Using this approach, two multi-material systems were systematically investigated, both previously reported to exhibit cracking during AM. First, cracking in nickel-copper multi-materials were studied using the IN625-CuCrZr pair. Although Ni and Cu are mutually soluble, alloying elements in IN625 induce immiscibility with Cu, forming two liquids with distinct freezing ranges and causing solidification cracking along Ni-rich grain boundaries. Moreover, cracking was found composition-dependent, peaking in the 20-40 wt.% CuCrZr-IN625 range. Additionally, lower heat inputs shifted the peak crack susceptibility toward higher CuCrZr compositions. Second, cracking mechanisms in L-PBF of steel-copper multi-materials were investigated using the 316L-CuCrZr system. Similar to the previous case, immiscibility in this system leads to the formation of two liquids with vastly different freezing ranges, and causes solidification cracking. Additionally, in this system, the Cu-rich liquid segregates between Fe-rich cells and dendrites, later promoting metal-induced embrittlement and liquation cracking. Experiments guided by these observations showed that mitigating phase separation significantly reduces cracking. Building on these findings, several strategies were developed to suppress cracking in the steel-copper system. These included gradual melting of CuCrZr on 316L, in situ alloying of CuCrZr with AlSi12, deposition of CuCrZr on boron steel, and employing laser beam shaping as a potential remedy. While process adjustments effectively reduced cracking, it was concluded that complete prevention requires tailoring feedstock chemistry and interface control through further process modifications. In summary, this thesis provides a phenomenological understanding of crack formation during fusion processing of immiscible multi-materials. It highlights the critical role of liquid immiscibility and phase separation in driving cracking and demonstrates that combining tailored processing strategies with compositional modifications is essential for mitigating these challenges. The findings establish a foundation for producing multi-material systems with improved structural integrity and processing reliability.