Abstract: A base sheet is laid on a back sheet and then is cut in a prescribed shape without cutting the back sheet. Embroidery then is made along the periphery of the base sheet. A sewing machine including a laser cutting system of the present invention is provided with a needle bar movable in a vertical direction; a sheet holding frame movable in directions in an X-Y plane a laser oscillator for oscillating laser light, and a sewing machine table. For a cutting process, vertical movement of the needle bar is stopped, the sheet holding frame is successively moved in the X-Y plane, and the laser oscillator successively oscillates laser light. While the sheet holding frame is thus successively moved on the sewing table, the base sheet is accurately cut in a prescribed shape with the laser light.