Laser cutting of a small diameter hole into aluminum foam is carried out, and thermal stress field developed in the cutting section is examined incorporating the finite element code. Laser cutting experiments are conducted to examine the morphological changes in the cut sections through using scanning electron microscope, energy-dispersive spectroscopy, and X-ray diffraction. It is found that von Mises stress attains high values in the region where the temperature gradient is high. The slow cooling of the last cut region in the hole circumference suppresses the stress level in this region. Holes cut are parallel sided and free from defects such as sideway burning and large burr formation.