A new underwater cutting technique applying underwater dismantling to commercial atomic reactor vessels has been developed. This technique involves gas cutting the mild steel underwater after removing the stainless steel cladding by arc gouging. The arc gouging is achieved by blowing out metal—which is melted by an arc between a mild steel electrode wire and the stainless steel—by jetting water from a rear water nozzle. The fuel gas employed for preheating for the gas cutting was a mixed gas of propane and 30% methylacetylene. The test piece used was made of 300-mm-thick mild steel with 8-mm-thick stainless steel cladding. The fundamental cutting experiment was carried out successfully under a cutting speed condition of 15 cm/min at a water depth of 20 cm. This apparatus is easy to handle, compact, and cheap.