In a sensor-fuzed munition system and method, the munition is provided with an additional laser designator mode of operation. In the laser designator mode, the munition has the option of initiating a target strike additionally based on whether laser designator energy is detected as being present on the target. This additional mode of operation is preferably achieved using the existing laser receiver of the rangefinder hardware, with minimal additional hardware and software systems for detecting and processing the additional laser designator signal energy. In this manner, collateral damage and false-target firings are decreased to near-zero probability.