Ultra-short pulse laser interaction with diamond materials has attracted extensive interest in micro- and nano-machining, especially for the fabrication of micro tools, because of the straightforward method and high precision. Thanks to the development of chemical vapor deposition (CVD) technology, high-quality CVD diamonds are employed in more varieties of tools as performance-enhancing coatings. The purpose of the experiments reported here was to explore the machinability of CVD diamond coating under the irradiation of femtosecond (fs) pulsed laser. The factor-control approach was adopted to investigate the influence of scanning speed, single pulse energy and repetition rate on the surface quality and carbon phase transition of CVD diamond coating. The material removal rate and surface roughness were evaluated. The interaction mechanism of scanning speed, single pulse energy, and repetition rate were discussed, and the fs laser ablation threshold of CVD diamond coating was calculated. It was demonstrated that two ablation mechanisms (weak and intensive) were in existence as evidenced by the distinct surface morphologies induced under different processing conditions. A strong dependence on the variation of scanning speed and pulse energy is identified in the examination of surface roughness and removal rate. Lorentzian–Gaussian deconvolution of Raman spectra illustrates that fs laser irradiation yields a strong modification effect on the coating and release the compressive stress in it. Furthermore, a newly defined parameter referring to the fs laser energies applied to unit volume was introduced to depict the degree of ablation and the Taguchi method was used to figure out the significance of different parameters. The ablation threshold of CVD diamond coating at the effective pulses of 90 is calculated to be 0.138 J/cm2.