We measured the resonator insertion losses, slope efficiencies and output power of six Nd doped Y3Al5O12 (YAG)laser crystals with and without chemical etching. It was found that chemical etching lowered the insertion losses and increased the slope efficiency. Point defects were investigated by positron annihilation spectroscopy (PAS). PAS depth profiles showed that the etching efficiently removed near surface atomic-scale defects. The results suggested that chemical etching is an effective means to improve lasing properties of Nd:YAG crystals, reduce the thermal loading and increase the strength.