In this paper, diamond crystals grown on sapphire (0001) substrate by laser ablation in oxygen atmosphere were reported. The experiments were performed at a substrate temperature of similar to 550 degrees C and in oxygen pressure of 0.11-0.15 Torr. Field-emission scanning electron microscope (FE-SEM), x-ray diffraction (XRD), and micro-Raman spectroscopy were applied to characterize the products. FE-SEM observation revealed that hexagonal- and triangular-shaped crystals were formed on the sapphire substrate, however, the crystal nucleation and growth were nonuniform and discontinuous. XRD and micro-Raman analyses indicated the coexistence of hexagonal and cubic diamond. Moreover, the secondary nucleation of diamond was observed. The diamond growth mechanism in laser ablation, a physical vapor deposition process, was different than that in chemical vapor deposition process. In an optimum region of carbon energy, carbon species implanted into substrate to form a local high-density region in which the formation of diamond phase (sp(3) bond) rather than graphitic phase (sp(2) bond) was favorable. At suitable substrate temperature and oxygen pressure, the diamond crystals nucleated and grew, while the graphitic phases were excluded by oxygen preferential etching. Compared to diamond synthesized in a hydrogen environment, the conditions for diamond growth in oxygen atmosphere are very critical.