The very bright electron beam required for an x-ray free electron laser (FEL), such as the LCLS, is susceptible to a microbunching instability in the magnetic bunch compressors, prior to the FEL undulator. The uncorrelated electron energy spread in the LCLS can be increased by an order of magnitude to provide strong Landau damping against the instability without degrading the FEL performance. To this end, a 'laser-heater' system has been installed in the LCLS injector, which modulates the energy of a 135-MeV electron bunch with an IR laser beam in a short undulator, enclosed within a four-dipole chicane. The last half of the chicane time-smears the energy modulation leaving an effective thermal energy spread increase. We present the first commissioning results of this system, its operational issues, its impact on the microbunching instability, and finally its effect on the FEL performance. Show Partial Abstract