To enable continuous operation for a long time by preventing a break of wire, and to provide a method of cutting a rare-earth alloy, improved in a cutting speed.

A cutting fluid is supplied into a clearance between wire adhered with abrasive grains and the rare-earth alloy, while cutting the rare-earth alloy. The cutting fluid having surface tension at 25°C from 33 mN/m to 49 mN/m is used. Alloy sludge produced when cutting the rare-earth alloy is separated from the cutting fluid by magnetic force. In a range recovering the sludge, a magnet separator indicating a magnetic force of not less than 0.27 tesla is used. By controlling the temperature of the cutting fluid, the surface tension of the cutting fluid supplied to the clearance between the wire and the rare-earth alloy is adjusted.