A bashful or embarrassed smile/laugh; a shy laugh caused by embarrassment. Can be used as a noun or as the verb 'to give a bashful laugh' (照れ笑いする).
彼は冗談を言われて照れ笑いをした。
He gave a bashful laugh when the joke was made at his expense.
彼女は照れ笑いしながらプレゼントを受け取った。
She accepted the present with an embarrassed smile.
あの場面で彼の照れ笑いが場を和ませた。
His shy laugh eased the tension in that situation.