An improved directed energy surgical method and assembly is disclosed. The method and assembly contemplate the application of a directed energy stream to tissue and the application of a liquid mist stream to the tissue to reduce or eliminate smoke at the surgical site. The invention may be advantageously implemented in an assembly having a surgical pencil for emitting the directed energy stream and liquid mist stream. The liquid mist stream is generated by the surgical pencil, preferably by atomizing a liquid stream supplied thereto (e.g., pressurized via jet atomization). The invention may be utilized in connection with conventional electrosurgical, laser surgery, ultrasound, and other techniques and devices.