The tool wear affects the efficiency of micro-USM process and the quality of machined micro-features. In this research endeavor, wear mechanism of soft/ductile and hard/brittle tool materials is investigated comprehensively. Stainless steel-304 (SS-304) and tungsten carbide (WC) were selected as tool materials for rotary tool micro-USM (RT-MUSM) process. The effect of tool material properties on tool wear and performance of RT-MUSM process is also discussed. The effect of RT-MUSM process parameters, viz. rotation speed, feed rate, power rating and slurry concentration on material removal rate (MRR), depth of channel (DOC) and width over cut (WOC) are reported. The experimental results showed that SS-304 tool worn out rapidly due to plastic deformation followed by strain hardening. The superior properties of WC such as high wear resistance, compressive strength and good acoustic property led to reduction in tool wear and thereby significantly improved the performance of RT-MUSM. Additionally, multi-response optimization was applied to obtain maximum MRR, DOC and minimum WOC simultaneously.