The planarization of rough polycrystalline diamond films synthesized by DC arc discharge plasma jet CVD (chemical vapor deposition) was attempted using KrF excimer laser pulses. The effects of laser incidence angle and reaction gases (ozone and oxygen) on etching rate of diamond were studied. The temperature change of diamond and graphite with different laser fluences was calculated by computer simulation to explain the etching behavior of diamond films. The threshold energy density from the experiment for etching of pure crystalline diamond was about $1.7J/cm^2$ and fairly matched the simulation value. Preferential etching of a particular crystallographic plane was observed through scanning electron microscopy. The etching rate of diamond with ozone was lower than that with oxygen. When the angle of incidence was $80^{circ}$ to the diamond surface normal, the peak-to-valley surface roughness was Significantly reduced from $20{mu}m$ to $0.5{mu}m$.