AISI 304 has good physical and chemical properties and thus is widely used. However, due to the low thermal diffusivity, the cutting temperature of AISI 304 is high accelerating the wear of the tool. Therefore, tool wear is a major problem in machining hard cutting materials. In this study, we developed a new type of micro-groove tool whose rake surface was distributed with micro-groove by powder metallurgy based on the finite element temperature field morphology. We compared the wear of the proposed micro-groove tool with an untreated one by using a scanning electron microscope (SEM) and an X-ray energy spectrum. The abrasive, adhesive, and oxidation wear of the rake and the flank face of the micro-groove tool were lower than that of the untreated one. Due to the micro-groove on the rake face of the tool, the contact length between the tool and chip was reduced, leaving more extension space. Furthermore, chip extrusion deformation was avoided, and the energy caused by chip deformation was reduced. After 70 min of cutting, the counterpart reached the specified wear amount while the main cutting force, the feed resistance, and the cutting depth resistance of the proposed micro-groove tool were reduced by 16.1%, 33.9%, and 40.1%, respectively. With regard to steady state, the cutting temperature was reduced by 17.2% and the wear width of the flank face was reduced by 36.7%.