Abstract: Aim To solve the problem of low interference resistance and low reliability in the acoustic emission monitoring for the tool breakage. Methods Based on the feature of tool breakage's and primary interference's acoustic emission signal during manufacturing process, the signal of tool breakage was identified with the monitoring methods such as differential amplifying, the distinguishing method with double threshold value. This monitoring and processing method was discussed. Results The corresponding monitoring system is developed. The system uses cooling and lubricating liquid as the medium to transmit AE wave, which can be handily installed. In addition, the system has many advantages, such as small volume and compact structure. Conclusion The experiment proved that the system has relativly high interference resistance and reliability.