There is the high interest for sensing of tool wear with the aim of controlling machine tools productivity from the point of view of qualitity. Difficulties in this measurement are also known. This study is on the development of measurement setup for crater wear by CCD image inturning. In this study, the crater wear measurement system consists of the He-Ne gas laser, diffraction grating. CCD camera, noise filter, slit, microcomputer, diverging lens, converging lens and so on. He-Ne laser beam passes through a diverging lens and a diffraction grating is positioned properly. A converging lens focuses so that the interference fringes can be obtained on the crater wear. Performance test revealed that the developed image technique provides precise, absolute tool-wear quantification and reduces human measurement errors. The results obtained are as follows 1. The digitizing of one image requires less than 2ses. 2. It can give detailed information on crater wear with limited times and errors 3. All parameters required by specification are easily obtained for several points of the cutting edge.