In order to fabricate ultra-precision diamond tools and delineate ultra-fine patterns into diamond chips without adding radiation damage, machining characteristics of diamond chips with electron beam assisted etching (EBAE) has been investigated. This processing mechanism is considered as follows: Oxygen atoms or molecules activated by electron beam bombardment on or near the chip surface react with carbon atoms of the diamond surface, resulting in formation of volatile products such as CO or C02 . An EBAE system composed of a scanning electron microscope (SEM) which has an oxygen introduction system was used to etch synthetic single crystal diamond chips. When a diamond chip was etched at an applied voltage of 10 kV and an irradiation beam current of 1.7nA, the depth of the holes increased with an increase of machining time and the diameter of the holes also increased with an increase of machining time. When a diamond chip was etched at an applied voltage of 10 kV and an irradiation beam current of 1.3nA, the depth and diameter of the etched holes merely increased with an increase of flow rate of oxygen gas ranging from 5 cc/min to 30 cc/min, then the depth decreased rapidly with an increase of oxygen gas. With this processing method, very small holes with a diameter of about 0.5 ∼ 2 /xm, and a depth of about 0.01 ∼ 0.7 fim were obtained. Line and rectagular patterns with several /xm and sub-μum depths were also fabricated.