An insulation stripping tool for flat cables includes a clamping device adapted to be clamped to a flat cable and to provide a linear guide edge for guiding a knife holder to accurately sever the outer insulation sheath of the cable in a transverse direction. Upon removal of the clamping device from the cable, the knife holder is inserted into a chamber contained in the clamping device with the knife edge protruding from the chamber, whereupon a curved side of the flat cable is inserted within first guide grooves contained in the clamping device, and the clamping device is displaced circumferentially of the cable to sever the curved cable side transversely of the cable. The curved cable side is then inserted into a second pair of grooves contained in the clamping device, and the knife holder is displaced longitudinally to sever the insulation sheath longitudinally of the cable.