Micro-detonation arc machining (MDAM) is a newly proposed special machining technology for engineering ceramics. To study its working principle is of important significance. By means of high speed video and current signal acquisition system, the shape of micro-detonation arc is observed and the formation course of micro-detonation arc is analyzed. The generation process of ablation pits for Si3N4 and Al2O3 is observed by high speed video. Experimental results show that the generating process of micro-detonation arc can be divided into two phases: spark discharge and stable arc. The diameter of micro-detonation arc increases as working current growing. Si3N4 ceramics decompose and Al2O3 ceramics melts when it machined with MDAM. The materials are removed by synergistic effect of high temperature and intensive impact pressure of micro-detonation arc.