The European manufacturing industry is currently facing the challenge of reducing production costs and times while increased product quality. In order to achieve this, the industry must develop new, innovative machining concepts beyond the current state-of-the-art. Current process monitoring systems concentrate on the monitoring of forces, vibrations and acoustic emission as input signals, but do not consider tool temperature. Tool temperature does however have a significant influence on workpiece quality and tool wear and therefore on manufacturing productivity. The ConTemp project will develop a self-learning temperature monitoring system combined with a self-cooling tool. The system will control and stabilise tool temperature in the cutting process, which leads to longer tool lifetimes and increased part accuracies. Significant cost reductions can therefore be achieved, as well as allowing the machining of difficult-to-cut materials without incurring the larger costs typically associated with this. The system is based on the development of a combined sensor/actor system. By using an innovative micro cooling device a closed coolant circuit can be used for the measurement of the tool temperature, and by variation of the coolant flow the temperature can be controlled. A further significant advantage of the system is the possibility of avoiding the need for cooling lubricant. Diamond coatings on the surface of the self-cooling tool will ensure maximumheat dissipation from the tool tip, and so sufficient cooling can be achieved with the interior micro-cooling device to allow dry machining. The avoidance of cooling lubricant will lead to substantial cost reductions and environmentally friendly machining.