Machining small holes with high efficiency and high surface quality remains a challenging issue. Laser and shaped tube electrochemical machining (LSTEM) has been proposed to process small holes, in which material removal is by a combination of laser processing and enhanced electrochemical machining. This study explored the evolution and characteristics of the machined profile of LSTEM to elucidate its material removal mechanisms. Results showed that these are related to the interelectrode gap (IEG) and laser power. LBM dominated the material removal process when the IEG was larger than 0.2 mm. When the laser power was greater than 4 W, the material at the central machining area could be directly removed by LBM with higher efficiency than ECM, and the central depth was larger than the surrounding depth in the machining zone. Variation of the electric current in the machining process has been acquired to monitor the status of LSTEM. Small holes with depths of 6.5 and 60 mm have been machined. Further, small holes with diameters of 1.35 mm were fabricated on the thermal barrier coated workpiece by LBM and LSTEM successively.