A cutting tool assembly and, more particularly, a novel holding device for cutting tools, especially such as flat beaded drill bits which are employed in the drilling of track rail. A tool holder possessing a generally solid cylindrical construction, having a first cylindrical shank portion is adapted to be fixedly installed in the rotary drive unit of a rail drill, and wherein the tool holder includes a second cylindrical shank portion coaxial with the first shank portion having a tool-mounting projection end. A clamping member extends transversely across a longitudinal slot formed in the second shank portion whereby actuation of the clamping member, such as a screw or the like, will selectively widen or narrow the slot. The shank end of a flat beaded track drill is inserted into the slot, with raised longitudinal beads on the opposite surfaces of the drill bit engaging into complementary longitudinal grooves formed in the facing surfaces of slot in the tool holder.