This paper discusses the need for on-line tool condition monitoring and chip-form identification during metal machining. Acoustic Emission (AE) analysis was applied to study the effect of tool wear and corresponding change in chip-form in face milling. The AE parameters and flank wear were measured at fixed interval. Also chips were collected simultaneously at same interval. The results indicate that the AE parameters namely ringdown counts, rise time increase with progressive tool wear; however number of events and event duration are sensitive to chip-form. These results may be readily used for in-process monitoring of chip status and consequently tool condition. © 1994.