A new system for on-machine measurement of workpieces is described. The system is based on a fine touch sensor that enables the cutting tool itself to act as a contact probe to inspect the workpiece. The proposed measurement technology combines the Q-setter with the fine touch sensor. This low cost measurement system is applied to automatic workpiece setup and improving workpiece dimensional accuracy on a CNC turning center. It is shown that using the proposed measurement system results in workpiece setting time decrease and workpiece machining accuracy improvement. The development of the onmachine measurement system makes the fine touch sensor extremely attractive for CNC machine retrofitting.