A modulating tool holder includes a tool holder first end and a tool holder second end, and a central axis extending between the tool holder first end and the tool holder second end. The tool holder first end has a coupler for coupling the tool holder to a drive member of a machining device and the second end includes a clamp for releasably holding either a tool or a workpiece. A rotatable spindle member extends axially in the tool holder and imparts a rotational movement to the clamp. A central fluid passageway extends between first and second ends of the rotatable spindle member for conveying a fluid. A linear actuator is configured to impart an oscillating movement to the clamp. The linear actuator is functionally decoupled from the torsional load of the rotatable spindle member.