So far ultraprecision diamond machining of steel molds for optical applications is not possible because of excessive wear of the applied diamond tools. This article discusses a thermochemical approach for steel machining with single crystal diamond tools as well as the process of material modification. Ultraprecision raster milling experiments for the nitrided carbon steel C45 (AISI 1045) and the tempering steel 42CrMo4 (AISI 4140) are presented. In both materials a surface roughness of Ra < 10 nm could be achieved. The observed flank wear of the cutting tools was VB < 2 mu m for all experiments after cutting work pieces with a diameter of 30 mm.