We report on an experimental study on the dynamics and fragmentation of water droplets levitated in a sound field exposed to a single laser-induced cavitation bubble. The nucleation of the cavitation bubble leads to a shock wave travelling inside the droplet and reflected from pressure release surfaces. Experiments and simulations study the location of the high negative pressures inside the droplet which result into secondary cavitation. Later, three distinct fragmentation scenarios are observed: rapid atomization, sheet formation and coarse fragmentation. Rapid atomization occurs when the expanding bubble, still at high pressure, ruptures the liquid film separating the bubble from the surrounding air and a shock wave is launched into the surrounding air. Sheet formation occurs due to the momentum transfer of the expanding bubble; for sufficiently small bubbles, the sheet retracts because of surface tension, while larger bubbles may cause the fragmentation of the sheet. Coarse fragmentation is observed after the first collapse of the bubble, where high-speed jets emanate from the surface of the droplet. They are the result of surface instability of the droplet combined with the impulsive pressure generated during collapse. A parameter plot for droplets in the size range between 0.17 and 1.5 mm and laser energies between 0.2 and 4.0 mJ allows the separation of these three regimes.