A cutter measurement tool of high precision based on digital image processing was investigated. The cutter was irradiated vertically by red LED light, the cutter image was taken and transformed into digital signal by CCD camera, the signal was send to computer by USB and analyzed by digital image processing software. In this software, an improved autofocus algorithm was proposed to realize rapid search with a long focusing range, a new calibration method of CCD camera was developed to work figure out the accurate calibration parameter, and a fixed subpixel edge detection algorithm was presented to extract cutter border. This tool features high accuracy and automatic level, thereby guarantees the high accuracy manufacture of CNC. The repeatability accuracy of tool can be up to 3 μm, which is verified with experiment.