We developed a wireless multifunctional tool holder system equipped with a thermocouple in the end mill to monitor the tool internal temperature and equipped a vibration sensor in the tool holder. We compared the temperature measured by high performance infrared thermographic imagery with that measured by a wireless tool holder system when end milling the steel. Moreover, we measured the radial directional acceleration caused by chatter vibration when boring the steel. As a result, the developed holder system is found to be effective to estimate the machining conditions with a machining center.