The binary collision based SDTrimSP model has been used to simulate the reactive ion beam etching (RIBE) of GaAs in the presence of energetic Ar ions and thermal O atoms. It includes the collisional effects, diffusive processes and chemical reactions taking place in the system. The model parameters are fitted using the experimental observations of Grigonis and co-workers [1] and validated with the experimental results obtained during the GaAs ion etching presented in this paper. A detailed analysis is presented to understand the effect of the diffusive processes and the role of O during RIBE of GaAs. It is shown how the presence of damage caused by the energetic Ar coupled with the presence of thermal O opens up chemical reaction channels which eventually leads to the preferential sputtering of Ga observed at the ion etching facility at University of Greifswald.