The requirements for ceramic composites as cutting tools for machining iron based alloys are reviewed, taking into account the trends in the industry towards dry high speed cutting and the need for tools with complex geometry. Chemical compatibility with iron is a major criterion to guide the selection of ceramic phases. The thermodynamically calculated total solubility of cutting tool in workpiece material correlates very well with the in service wear behaviour at high speed. It is concluded that alumina and zirconia are promising matrices for composites to machine steel. For the former, chemically compatible composites are needed with higher toughness. The latter lacks the required hardness and this deficiency also will need to be remedied by addition of a second phase.