In this paper, general laser image engraving arithmetic such as ordered dither and error diffusion was studied. Based on visual grayscale characteristic, a new method of multi-level grayscale module for laser image engraving was proposed. Using this method, a color image was processed through grayscale conversion and color quantization, then engraved with engraving module without digital halftoning process. With lamp pumped Nd:YAG laser and x-y scanners, a 25-level grayscale, 247 dpi laser engraving image system is implemented.