A coiled tubing cutter assembly comprises a housing (72) configured to be inserted in a length of coiled tubing (74). The housing forms a main bore (76) and a first pathway (78) through which cutting fluid can flow through the housing and be directed to impinge against an inner surface of the coiled tubing over which the housing is positioned so as to cut the coiled tubing. A sleeve (80) is positioned in the main bore. The sleeve is movable between a first position and a second position within the main bore. The sleeve is configured so as to block the first pathway when in the first position and to allow cutting fluid to pass through the first pathway in the second position. A method of cutting coiled tubing is also disclosed.
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