In this work an alumina-yttrium aluminum garnet (Al2O3-YAG) cutting tool was developed and characterized aiming application in dry machining of nodular (spheroidal) cast iron. Ceramic powders containing 85 wt.% Al2O3 and 15 wt.% Y3Al5O12(YAG) were homogenized, compacted, and sintered at 1600 ºC for 2h at a heating rate of 5 °C/min. The sintered ceramic presented relative density of 98.3 ±0.2%. X-ray diffraction (XRD) and Scanning Electron Microscopy (SEM) revealed α-Al2O3 and YAG as crystal phases, both with equiaxed grains with average sizes of 1-4 𝜇m (Al2O3 phase) and 0.7-1 𝜇m (YAG phase). In addition, this ceramic composite presented Vickers hardness and fracture toughness of 15.2 ±0.2 GPa and 4.6 ±0.3 MPa.m1/2, respectively. The dry machining performance of the Al2O3-YAG cutting tool was compared with that of a commercial cemented carbide cutting tool using cutting speed (VC) of 200 and 500 m/min, feed rate (f) of 0.25 and 0.10 mm/rev, and axial depth of cut (ap) of 0.60 mm. The results showed that the best setting for the cemented carbide cutting tool was obtained at VC=200 m/min and f=0.25 mm/rev, which produced the best machinability with average surface roughness (Ra) of 3.516 μm, cutting length (LC) of 6000 m, and maximum flank wear (VBmax) of 0.58 mm. For the Al2O3-YAG cutting tool, the best setting was achieved at VC=500 m/min and f=0.10 mm/rev, which produced Ra=0.848 μm, LC=12,293 m, and VBmax=0.54 mm.