In this paper, a 4-electrode cylindrical capacitance displacement sensor (CCDS) is presented as an indirect force sensor for a high speed milling spindle. A rotor-bar system for the magnetic exciter is designed to investigate the tool deflection with respect to the applied cutting force. To extract the deflection signal from the CCDS, the dynamic orbital motion at each rotating speed of spindle is predetermined and then subtracted from the CCDS signal. The CCDS signal is also used as a reference sync signal. The rotor-bar system is designed so that the rotor affects the tool-spindle dynamics only as an added mass but does not contribute to the bending property. The additional effect of the rotor mass in the exciter setup is compensated for by an experimental modeling. The cutting force can be estimated by using modified CCDS signals and FRF. Cutting experiments are conducted to show reliable performances of the proposed approach by high speed machining applications.