An erosion monitoring system is disclosed for use with a machine. The erosion monitoring system may have an ultrasonic sensor embedded within a replaceable cutting edge of a ground engaging tool connectable to the machine. The erosion monitoring system may also have a wireless communication element associated with the ultrasonic sensor, and a controller mountable onboard the machine in communication with the ultrasonic sensor via the wireless communication element. The controller may be configured to monitor a wear rate of the cutting edge based on signals from the ultrasonic sensor.