Analysis of the experimental data presented in Part I of this paper and those available in the literature revealed that the mechanism of material removal in laser machining of chemically vapour-deposited diamond is a two-step process : diamond transforms to graphite, and subsequently graphite sublimates. The energy fluence required for the formation of graphite is much lower than its removal by sublimation, and both are sensitive to the wavelength of the laser beam, the impurities present in the film and the environment during machining. When a 248 nm excimer laser beam interacts with diamond, there is an energy loss of 20% by reflection and 10% by transmission. The remaining 70% energy is used for heating the diamond, converting diamond to graphite, and sublimating graphite. Graphite is removed mostly by physical ablation and to some extent by chemical oxidation with the ambient.A theoretical calculation based on bond strength estimates that the threshold energy fluence for the ablation of diamond is 0.37 Jcm(-2). The experimental energy fluence was 0.8 Jcm(-2). Experimental results on the material removal rates as a function of energy fluence closely follow the Beer-Lambert equation, suggesting that physical ablation is the determining mechanism. Temperature calculations showed that both diamond and graphite tend to oxidize in a single laser pulse that contributes to the material removal.