In order to satisfy the machining of high precision components, much higher accuracies have been put forward for diamond cutting tools. From the viewpoints of fabrication and utilization of rounded diamond cutting tools, the material removal mechanism of lapped diamond surface layer is studied by lapping experiments. And also, the crucial processes for tool fabrication and re-lapping are analyzed and discussed. Moreover, the working state of lapping equipment affecting tool lapping quality is lucubrated. At the same time, the representative qualifications of rounded diamond cutting tools are defined and their assessment methods are proposed, respectively. Finally, in terms of the relationship of the removal mechanism and tool lapping quality, the lapping parameters are optimized for the fabrication of high precision diamond cutting tools. The results indicate the sharpness can be reduced to 30nm.