Sputtering with gas cluster ions, which are aggregates of a few thousands of atoms, has been investigated experimentally and theoretically. Cluster ion beam etching is equivalent to low-energy high-current ion etchings with very low damage. Interesting new phenomena resulting from multiple collisions of incoming atoms in a very localized area were found. A surface smoothing effect is one of the typical phenomena, which is caused by lateral sputtering in which many atoms are ejected from the substrate in a lateral direction. Molecular dynamics simulation clearly shows that these sputtered atoms are ejected from the edge of craters formed by cluster ion impact.