This paper introduces a new hybrid model for tool condition monitoring (TCM) and optimal tool management (OTM) in end milling operation. The model includes a wavelet fuzzy neural network with acoustic emission (AE) and a model of fuzzy classification of tool wear state with the detected cutting parameters supported by cutting database. The results estimated by cutting conditions and detected signals are fused by artificial neural network (ANN) so as to facilitate effective tool replacement at a proper state or time. The validity and reliability of the method are verified by experimental results.