Magnesium and magnesium alloys are being increasingly used in various areas of industries due to their low densities and high specific strength. In this research, extruded sheets of AZ31 magnesium alloy were machined by a carbon dioxide laser. Without surface coatings to raise an absorption of laser beam, sheets of 1 mm thickness were able to cut successfully at the condition of beam power 400 W and feeding speed 25 mm/s. Average height of drosses was about 300 μm when feeding speed was larger than 12 mm/s. Furthermore, by using argon as assist gas, processing damages like cracks and pores were inhibited. However, oxidation of the laser-cut surfaces was not depressed perfectly, some oxides were observed in drosses and at the top edge of cut surface. The thickness of melted and re-solidified layer was 7 μm at the upper part of cut surface and 24 μm at the lower part. The re-solidified layer consisted of 2 thin layers at the lower part of cut surface. Refined pores less than 1 μm were observed at the interface of these 2 layers.