Electron beam assisted chemical etching (EBACE) with oxygen gas is applicable to direct fine patterning of single crystal diamond substrates. A scanning electron microscope (SEM) combined with an oxygen gas introduction system was used for EBACE of diamond. In order to prevent surface charge-up during etching and SEM observation, a hydrocarbon contamination layer, which has conductivity and can be deposited during electron beam irradiation using oil vapor in a vacuum system, was used. Etching characteristics of single crystal diamond substrates by EBACE with oxygen gas were mainly investigated. It was found by in-situ SEM observation that hole, line and rectangular patterns with several μm2 area and sub-μm depth into the diamond substrates were successfully fabricated by EBACE utilizing spot, line and raster scanning modes of the SEM. The depths of holes and rectangular patterns were proportional to electron beam exposure times. Etched areas of line and rectangular patterns were larger than scanned area. An etching yield of 1.99 × 10-2 carbon atoms of diamond per electron has been observed for EBACE using oxygen gas.