Finish machining of sintered steel is increasingly important for near net shape technology. However, the life of a cutting tool for machining sintered steel is generally much shorter than for carbon steel and thus, finish machining increases the manufacturing cost of sintered products. For this reason, wear characteristics of several grades of cutting tools in turning sintered steel were investigated under different lubrication conditions. As a result, it is found that a P10 grade of cermet and an S01 grade of AlTiN coated carbide are recommended for dry machining. When cutting fluid is necessary for chip control and disposal, air jet assisted wet machining with a K10 uncoated cemented carbide and wet machining with a P10 cermet are recommended. It is also found that a small amount of cutting fluid remained in the workpiece during wet machining caused an intense thermal impact to a P10 uncoated cemented carbide leading to short tool life.