Abstract The magnet-assisted laser hole-cutting in magnesium alloys was explored systematically with and without using water immersion, including femtosecond laser multilayer center-oriented hole-cutting and millisecond laser helical hole-cutting of both blind holes and through holes. The effect of the magnetic field and water immersion on laser hole-cutting quality, efficiency and performance is first reported for magnesium alloys with mechanism analysis and comparable discussion. It was shown that the magnetic assistance and/or the water medium improved the hole wall formation especially for underwater laser cutting of blind holes. Compared to laser hole-cutting in air, the underwater laser hole-cutting generated higher-quality holes in magnesium alloys. For laser hole-cutting in magnesium alloys in water, it is first reported that the magnetic field increases the entrance diameters for blind and through holes while decreases the blind-hole depth. The water cooling-insulating effect prevented the molten and vaporized material from re-solidifying and re-depositing onto the workpiece, and the laser-induced ignition and explosion were also prevented by water. The local laser-induced ignition and explosion were weakened when increasing the magnetic flux density. The local oxidation and carbonization reactions in air as a result of the laser-induced ignition and explosion were suppressed while the laser hole-cutting efficiency was enhanced by using the transverse magnetic assistance. The blind-hole recast layer was significantly reduced nearly without accumulated residues and carbonized or oxidized debris by using underwater laser hole-cutting, indicating that the water suppressed the laser-induced melting, vaporization, ignition and explosion and blocked the re-solidification and re-deposition surrounding the hole entrance and onto the hole wall for the recast layer formation. The average grain size number in the heat affected zone (HAZ) near the hole was improved for grain refinement by increasing the magnetic flux density, demonstrating the magnetic field-induced reduction for the local excessive thermal effect of the femtosecond laser-generated plasma on laser hole-cutting and recrystallization. The micro hardness was improved after laser hole-cutting with and without magnetic assistance mainly due to the HAZ recrystallization-induced grain refinement, and the hardness value roughly increased with the magnetic flux density.