In this paper, we propose a new shape compensation scheme to make up for the difference in groove radius between the formed tools and the machined bearing raceways, which inherently takes place during machining the ball bearing raceways by the turning process using conventional formed tools. The associated conventional methods of the formed tool design and its modification such as a simple depth compensation method and a graphical compensation method are introduced and the latter, which has been known to be the better of the two, is experimentally investigated in detail to reveal its drawback. The algorithm is given and it is applied to develop a formed tool design program. The program developed by the presented approach is successfully applied to design the formed turning tool for the bearing raceways.