This paper describes the machining characteristics of a developed micro grooving machine. Experiments have been conducted on the various grooving condition such as spindle revolution speed, feed rate and depth of groove. V and U-shaped blade tool and STD11 workpiece was used in this study. To evaluate the developed micro grooving machine, AE signal obtained from each experimental condition was analyzed, and cutting stability was compared with the surface state. As a result this study presented the process to optimize grooving condition and possibility of application of AE technique in groove machining.