In recent years, more and more ultra-fine machining necessities are increasing for micro-parts and micro-components fabrication. Although down-sizing of tools are tried for micro-machining, it is not easy to realize smart fabrication because sensing and measurement of micro-machining is difficult. The authors are conducting a research and development on sensing, measurement and analysis of micro-machiring phenomenon for establishment of optimization of machining conditions and automation of high-level machining processes. Under this background, we devised on-line sensing, measuring, and analyzing system for micro-machiring with micro-tools. This system can cope with from fabrication of micro-tools to micro-machining of micro-structures on the all-in-one machine under on-line sensing, measuring functions. Through the application of this system, we investigated the sensing of contact point chip-formation and monitoring in micro-machining, together with fabrication and analysis of micro-tools of even several nierons diameter. In this paper, we introduce the developed system and describe the micro-tools fabrication and micro-machining under on-line sensing and measurement.