We developed a two-step facet etching method combining inductively coupled plasma etching and KOH-based wet-etching surface treatment to achieve vertical and smooth facets for AlGaN-based ultraviolet (UV) multiple-quantum-well lasers on sapphire substrates. Stimulated emission at 272 nm was observed by optical pumping on both lasers with cleaved facets and two-step-etched facets with line widths of 1.3 nm and 0.4 nm, respectively. Compared to the laser with cleaved facets, the threshold optical power density of the laser with two-step-etched facets significantly reduced from 520 kW cm⁻² to 350 kW cm⁻², and the differential quantum efficiency increased onefold. Further analysis shows that the better performance of the two-step-etched AlGaN-based UV laser mainly results from the smooth and uniform facets after the wet-etching surface treatment, which is an effective and controllable approach combined with dry etching for laser facet fabrication.