A tool condition monitoring system (10) monitors the power consumption of a tool during performance of a cyclical task. The system monitors (16) a plurality of characteristics of the power consumption and diagnoses the condition of the tool based upon the plurality of characteristics. A rule base of the plurality of characteristics is generated in a learning mode by monitoring a tool of known condition for a plurality of cycles. In monitor mode, the system monitors the power consumption of a tool and diagnoses the condition of the tool by indexing the rule based upon the plurality of characteristics monitored. In addition, a method is disclosed wherein the band may be modified for accommodating tool wear, such that a tool, although dull, may be utilized and monitored.