316L grade stainless steel powders were produced by centrifugal atomization during the melting of a rotating rod heated by a high-power LASER beam. The feasibility has been demonstrated by atomizing a range of stainless steel rods. The atomization process has been observed via high-speed imaging and fragmentation regimes have been identified according to a literature review on the rotating electrode process (REP). Results were compared with literature data and an existing prediction model for such a process. High-speed observation can monitor the present process and it is shown that a solidified layer of metal is formed at the edge of the rod during the process inducing metal flake ejection due to the centrifugal stresses. Effects of incident LASER beam power density, ejection speed and oxygen content of the surrounding atmosphere on the particle size distribution and the sample surface have been studied and compared with literature data on classical REP atomizers. The study focuses on the production of irregular particles during the atomization process and highlights the influence of the oxygen content in the surrounding atmosphere on the fragmentation regime and the resulting particle size distribution.