A finite-difference time-domain (FDTD) method based on Maxwell’s equations coupled with time-dependent electron carrier density equation is proposed to investigate numerically femtosecond laser irradiation of dielectrics with a small inhomogeneity. The process of plasma generation due to multiphoton absorption near small defect in fused silica is studied in details and local field distribution around the inhomogeneity is first explained by using the Rayleigh scattering theory. Further investigation of the laser-matter interaction shows that the generated plasma properties do not significantly depend on the size of the inhomogeneity as long as it remains considerably smaller than the irradiation wavelength. The calculation results show, however, that there are several parameters, which are crucial. Among such parameters, for instance, is the collision frequency, which affects strongly both the created electron density and laser propagation. In addition, the changes in the refractive index of the plasma are taken into account by the Lorentz-Drude model with time-dependent carrier density. The differences between the results calculated by using Keldysh theory for multiphoton ionization and obtained by considering only six-photon ionization are discussed. Finally, temporal changes in the behavior of scattering due to generated nanoplasma are observed and analyzed by using Mie scattering theory, which is more complete than Rayleigh one.