Aiming at the problem that the cathode electrode diameter of a short arc NC machine tool could not be accurately detected, a method for online monitoring of cathode electrode diameter was proposed. Using the monitoring method, the wear amount of the cathode electrode could be accurately obtained; through the bus module, the cathode electrode wear amount was feed back to the numerical control system. The numerical control system dynamically adjusted the position of the cathode electrode by driving the compensating shaft to ensure that the discharge gap between the cathode electrode and the anode electrode was within the control range, and the processing was ensured to proceed smoothly. On this basis, an adaptive compensation scheme for short arc NC machine tools was proposed, by which automatic machining of the machine tool could be realized, thus the automation degree of short arc machine tools was improved.