We demonstrate that vertically aligned carbon nanotubes (CNTs) can be precisely machined in a low pressure water vapor ambient using the electron beam of an environmental scanning electron microscope. The electron beam locally damages the irradiated regions of the CNT forest and also dissociates the water vapor molecules into reactive species including hydroxyl radicals. These species then locally oxidize the damaged region of the CNTs. The technique offers material removal capabilities ranging from selected CNTs to hundreds of cubic microns. We study how the material removal rate is influenced by the acceleration voltage, beam current, dwell time, operating pressure, and CNT orientation. Milled cuts with depths between 0-100 microns are generated, corresponding to a material removal rate of up to 20.1 mu m(3)/min. The technique produces little carbon residue and does not disturb the native morphology of the CNT network. Finally, we demonstrate direct machining of pyramidal surfaces and re-entrant cuts to create freestanding geometries. (C) 2015 AIP Publishing LLC.