Ultrahard nanotwinned diamond (nt-D) is an excellent diamond material with higher hardness, better fracture toughness and thermal stability than the commonly used single crystal diamond (SCD), thus it is considered as a promising tool material applied in ultra-precision cutting. However, extremely high hardness results in the fabrication of nt-D tool more difficult than SCD because of very low machining efficiency when using the conventional mechanical methods. Aiming to mass-produce of nt-D tool, the femtosecond pulsed laser milling technique was applied, and the related phase transition mechanism was explored during processing nt-D. Then, a trochoidal trajectory was proposed to acquire high forming accuracy and sharp edge in this study. It is found that the cubic diamond within nt-D was transformed into amorphization directly rather than graphitization under laser processing, which is attributed to the enhanced phase stability for nt-D. Furthermore, the nt-D surface integrity processed by laser was mainly restricted by diamond falling-off pits dewetting from grain boundary. Then, an optimized trochoidal trajectory method was proved to effectively decrease the depth of the falling-off pits and improve the surface integrity by the aid of laser pulse delay. Through the distribution calculation of pulse overlapping with the deduced theoretical equations and processing parameters optimization of galvanometer rotation, an nt-D cutting tool was successfully fabricated with smooth surface and sharp cutting edge. Finally, the wear mechanism, wear resistance and cutting performance of the as-fabricated nt-D tool were explored through cutting testing of hard polycrystalline MgF2. The results supported that nt-D tool exhibits better wear resistance and cutting performance than nanograined polycrystalline diamond (NPD) tool.