The inverse offset method (IOM) is widely used for generating cutter paths from the point-based surface where the surface is characterised by a set of surface points rather than parametric polynomial surface equations. In the IOM, cutter path planning is carried out by specifying the grid sizes, called the step-forward and step-interval distances respectively in the forward and transverse cutting directions. The step-forward distance causes the chordal deviation and the step-forward distance produces the cusp. The chordal deviation and cusp are also functions of local surface slopes and curvatures. As the slopes and curvatures vary over the surface, different step-forward and step-interval distances are appropriate in different areas for obtaining the machined surface accurately and efficiently. In this paper, the chordal deviation and cusp height are calculated in consideration with the surface slopes and curvatures, and their combined effect is used to estimate the machined surface error. An adaptive grid generation algorithm is proposed, which enables the IOM to generate cutter paths adaptively using different step-forward and step-interval distances in different regions rather than constant step-forward and step-interval distances for entire surface.