A wafer processing method transfers an optical device layer (ODL) in an optical device wafer (ODW) to a transfer substrate. The ODL is formed on the front side of an epitaxy substrate through a buffer layer, and is partitioned by a plurality of crossing streets to define a plurality of regions where optical devices are formed. The transfer substrate is bonded to the front side of the ODL. The transfer substrate and the ODL are cut along the streets. The transfer substrate is attached to a supporting member, and a laser beam is applied to the epitaxy substrate from the back side of the epitaxy substrate to the unit of the ODW and the transfer substrate. The focal point of the laser beam is set in the buffer layer, thereby decomposing the buffer layer. The epitaxy substrate is then peeled off from the ODL.