An automatic tool changer for a lathe is provided having a rotating drum-type tool storage magazine mounted to the cross slide of the lathe and rotatable to align any one of a plurality of tool holder assemblies and their tools, supported by the magazine, with a guide channel through which a selected tool holder assembly and tool can be slid to the active position, or tool past, on the cross slide, for operating on the workpiece supported by the lathe. A stationary, double-acting, hydraulic piston is disposed in the central portion of the drum-type magazine, having its piston rod in alignment with the guide channel and having a tool holder assembly shuttle member attached to the rod, for transporting an active tool and holder assembly from its ready position in the magazine, in a straight line radially outward from the magazine to the tool post, and for returning the tool holder assembly and tool to their storage position on the magazine after use.