Powder metals are becoming a popular choice in the automotive and other manufacturing industries because of their ability to meet wide ranging product functional requirements without compromising the performance of the product. They offer various advantages, including weight reduction, near net-shape processing capability, and their ability to be sintered to achieve desired properties in the end-product. However, in order to satisfy the product design requirements during manufacturing, they need to be machined to the required tolerances. Machining of powder metals is quite different to machining of traditional metals because of their specific properties, including porosity. This thesis work deals with the finish machining of powder metal steels in automotive applications, for increased tool-life/reduced tool-wear. Tool-life is affected by a variety of factors such as tool grade selection, tool coating, cutting conditions and tool geometry including cutting edge geometry. This work involves optimization of cutting conditions for plunge cutting and boring operations of automotive powder metal components using PCBN and carbide tools. The cycle time of the process introduces an additional constraint for the optimization model along with the tool-wear criterion. Optimized cutting conditions are achieved for maximum tool-life.