In order to reduce the thermal effect of laser dicing of silicon wafer, deionized water was used as assistant liquid to dice the silicon wafer. However, bubbles was induced during laser ablation and led to adverse effects on surface of silicon underwater dicing. Ethanol was mixed into deionized water to decrease the number of bubbles adhering on the surface of silicon which generated during the underwater laser dicing process. The impact of laser parameters and ethanol concentration on dicing quality were analyzed. The results of experiment show that the usage of ethanol as the assistant medium can decrease the number of bubbles adhering on the surface of silicon and alleviate the negative effect of bubble collapse. The kerf width decreases by 20% and the area of affected zone decreases by more than 50% when diced in an ethanol concentration of 5 wt.% compared to when diced in pure water. The dicing quality is improved effectively.