The purpose of this study was to investigate the effect of liquid environments upon laser bone ablation. A long-pulsed Er,Cr:YSGG laser was employed to ablate bovine bone tibia at various radiant exposures under dry, wet (using water or perfluorocarbon) and spray environmental conditions. Energy loss by the application of liquid during laser irradiation was evaluated, and ablation performance for all conditions was quantitatively measured by optical coherence tomography (OCT). Microscope images were also used to estimate thermal side effects in tissue after multiple-pulse ablation. Wet using water and spray conditions equally attenuated the 2.79 µm wavelength laser beam. Higher transmission efficiency was obtained utilizing a layer of perfluorocarbon. Dry ablation exhibited severe carbonization due to excessive heat accumulation. Wet condition using water resulted in similar ablation volume to the dry case without carbonization. The perfluorocarbon layer produced the largest ablation volume but some carbonization due to the poor thermal conductivity. Spray induced clean cutting with slightly reduced efficiency. Liquid-assisted ablation provided significant beneficial effects such as augmented material removal and cooling/cleaning effects during laser osteotomy.