Instructions
Level the Crafting profession in the game. You have to have a Crafting skill of at least 20 before you can start cutting gems. You can level it up by completing various quests and by creating items. Cutting sapphire requires a Crafting level of 20, emerald requires 27, ruby requires 34 and diamond requires 43. Every time you cut a gem you gain experience.
Acquire the uncut gems. You can purchase uncut gems from other players or obtain them from random enemies that you kill.
Purchase a chisel at any general store in the game.
Open the Crafting user interface, select the gem you want to cut and click "Make" to start cutting the gems.