A hammer drill has a motor which drives an axially displaceable intermediate gear mounted in an intermediate gear arrangement. An impact mechanism is formed by including interacting impact cams between either the intermediate gear and the housing, or the motor armature shaft and the housing to generate a reciprocating motion on an output spindle or shaft. A spindle locking mechanism is included which causes an intermediate gear to be disengageable with respect to the output shaft, while still permitting the impact mechanism to be engaged. Such an arrangement allows the hammer drill to operate in a hammer-only or chipping mode.