In this dissertation, a modified nonlinear Schr"odinger equation is derived, which describes the propagation of ultrashort laser pulses through nonlinear materials in which plasma generation and laser-induced damage can occur. Differences between this model and models currently used in the literature are investigated and analyzed by numerical simulations. Ultrafast laser-induced material modification is investigated using this method by simulating the propagation of fully 3+1D (3 spatial plus 1 time dimension) laser pulses, which are numerically constructed from experimentally measured beam profiles and pulse shape data. The latest of these investigations reveals that standard rate-equation models for the free-electron plasma generation in the material may not adequately describe ultrafast plasma dynamics, and possible solutions for this problem are discussed. It is expected that a better understanding of the dynamics of ultrashort laser pulse-induced plasma will enable the accurate simulation of optical damage in a variety of dielectrics, ultimately leading to an enhanced control of laser-induced modification to real materials and optical devices.