A cylindrical capacitance-type spindle displacement sensor was developed and its effectiveness as a system to monitor cutting forces during hard turning was tested in this research. The sensor was installed between the face of spindle cover and the chucking element and measured pure radial motion of the spindle under the condition with presence of roundness error at measured surface. To prove the effectiveness of the developed system hard aiming tests using ceramic inserts and tool steel as workpiece were conducted. The workpiece was hardened up to 65 Rc. The variations of pure radial motion of the spindle ware measured during the cutting tests. The signals from the sensor showed the same pattern of cutting force variations from the tool dynamometer due to the progress of tool wear. As the flank wear of the ceramic tool increased both static component of cutting forces and the amount of center shift of spindle orbit increased, Results from the research showed that the developed sensor could be utilized as an effective and cheap on-line sensing device to monitor cutting conditions and tool performance in the un-manned machining center.