A tool change mechanism in a machine tool includes a tool change arm arranged to attach a protection cover member to the forward end of a spindle head for protection of a ring secured to the forward end of a tool spindle in the spindle head and to remove the protection cover member for replacement with a tool holder of large diameter. The tool change arm is further arranged to insert the tool holder into the tool spindle and remove it from the tool spindle, the tool holder having a ring gear secured thereto for meshing engagement with the ring gear of the tool spindle and a protection cover part integrally formed therewith to be coupled with the forward end of the spindle head for protection of the ring gears meshed with each other when the tool holder has been inserted into the tool spindle. The tool change arm has a pair of tool grippers each having a first grip portion for engagement with the protection cover member and a second grip portion for engagement with the tool holder.