Diamond has attracted considerable attention as an advanced‐generation material for power devices because it shows high breakdown characteristics and carrier mobility. For the development of high‐performance diamond power devices, each interfacial atomic structure must be optimized to encourage carrier conduction. Advanced etching processes without material damage could solve this issue. In this study, the inductively coupled plasma (ICP) etching, a basic device processing technique for diamond power devices is focused on. The electrical properties of diamond are deteriorated under repeated processing for mesa‐structured devices; therefore, it is estimated the ICP etching effect on diamond surfaces by angle‐resolved X‐ray photoelectron spectroscopy. At first, damage to the etched diamond surface is observed. The 2‐nm thickness of the damaged layer is reduced by decreasing the set bias voltage. However, graphite components appear with etching at lower bias voltages. Because annealing and mixed‐acid treatments effectively remove these graphite components, a three‐step method of zero‐bias‐voltage ICP etching, annealing, and mixed‐acid treatment is used for the damage reduction process. A clean surface is obtained using hydrogen plasma treatment as a finishing process.