Single-crystalline MgO is used as a substrate for the deposition of various functional thin films. The present study focused on the development of a complete sequence of fabricating atomic step-terrace structures on the MgO substrate via a method that includes grinding, precise mechanical polishing, chemical mechanical polishing (CMP), and high-temperature annealing. The effect of a damage-free surface pretreatment on the subsequent high-temperature annealing was investigated. An atomically smooth and damage-free MgO substrate surface with an average surface roughness of 0.05 nm was obtaining via a CMP process using a colloidal silica slurry. Atomic step-terrace structures were formed on the substrate after the high-temperature annealing process at 1000℃ for 20 h under atmospheric air. The obtained step height was 0.20 nm, which corresponds to one-half the unit cell of an MgO crystal (0.21 nm). By contrast, when a mechanically damaged MgO substrate was subjected to the annealing process, Ca segregation was observed on the annealed surface, without the formation of an atomic step-terrace structure. CMP was found to be necessary prior to high-temperature annealing to attain a atomic step-terrace structures and to avoid the out-diffusion of impurities in the MgO bulk crystals.