In order to achieve accurate machining of stone contour, the design of cutter compensation module of different tools is the key technology for developing CNC system. Through the research of the C-function cutter radius compensation algorithm, several kinds of transforming of cutter compensation and its estimating algorithm were briefed, and by combining with the machining characteristics of the stone bridge cutting machine, the cutter radius compensation algorithm of sawing, milling and grinding were designed. By using the hardware structure of PC & motion control card, the stone bridge cutting machine CNC system software was designed and developed with Visual C++ software. Cutter compensation of sawing, milling and grinding were simulated, and the machining was tested in the factory. The results show that the machining of machine is stable, and the cutter radius compensation algorithm can realize automatic tool compensation function.