This paper introduces a kind of electric hot milling method for T10A tool steel and analyses its feasibility. Collect temperature signals and vibration signals in the machining process by a set of signal acquisition system. Afterwards, process these signals by using wavelet transform and wavelet packet transform, compare and analyze them in different working conditions. The results of the study indicate that through comparison between dry milling and electric hot milling, the latter can be more effectively milling tool steel, and improve the cutting tool durability.