A wafer processing method divides a wafer into individual devices along crossing streets formed on the front side of the wafer. The wafer has a substrate and a functional layer formed on the front side of the substrate. The individual devices are formed from the functional layer and are partitioned by the streets. A laser beam is applied along the streets from the front side of the functional layer to thereby remove the functional layer along the streets. A resist film is formed on the front side of the functional layer except on each street. The substrate of the wafer is plasma-etched along each street where the functional layer is absent to the depth corresponding to the finished thickness of each device, thereby forming a division groove along each street and also etching off a modified layer formed on the opposite sides of each street.