A system and method for defect localization in embedded memory are provided. Embodiments include a system including automated testing equipment (ATE) interfaced with a wafer probe including a diagnostic laser for stimulating a DUT with the diagnostic laser at a ROI. The ATE is configured to simultaneously perform a test run at a test location of the DUT with a test pattern during stimulation of the DUT. Failing compare vectors of a reference failure log of a defective device are stored. A first profile module is configured to generate a first 3D profile from each pixel of a reference image of the defective device. A second profile module is configured to generate a second 3D profile from each pixel of the ROI of the DUT. A cross-correlation module is configured to execute a pixel-by-pixel cross-correlation from the first and second 3D profiles and generate an intensity map corresponding to a level of correlation between the DUT and defective device.