The conventional blasting method generates serious blasting vibration and underbreak/overbreak in spite of its high efficiency for rock excavation. To overcome these disadvantages, this paper introduces an alternative excavation method that combines the conventional blasting process with the free surface on the perimeter of the tunnel face using waterjet cutting technology. This proposed excavation method has advantages of (1) reducing vibration and noise level; (2) minimizing underbreak and overbreak; and (3) maximizing excavation efficiency. To verify the effects of the proposed excavation method, field tests were performed with a smooth blasting method at the same excavation conditions. Test results show that the vibration is reduced by up to 55% and little underbreak/overbreak is generated compared with the smooth blasting method. In addition, the excavation efficiency of the proposed method is greater than that of the smooth blasting method. The proposed blasting method with a free surface using waterjet cutting can be applied to urban excavation construction as well as to underground structure construction.