An electrosurgical system and method for treating hard and soft tissues in the body comprises a shaft, a distal end section, an active electrode associated with the distal end section, a first fluid supply adapted to deliver a first electrically conductive fluid to the target site, and a second fluid supply adapted to deliver a second electrically conductive fluid to the active electrode. The system is adapted to treat a wide variety of hard tissues such as, for example, bones, calcified structures, calcified deposits, teeth, plaque, kidney-stones, gall-stones and other types of tissue by generating plasma in the vicinity of the active electrode, and applying the plasma to the tissue or structures.