This paper proposes a methodology for improving the machining accuracy based on auto tool setting & work-piece measuring on the machine using laser tool setting system & inspection probe. In this study, laser tool setting systems were analyzed as considering principles, convenience and efficiency and auto tool setting method and operating macro software were developed. As compared with conventional manual tool setting and touch-type auto tool setting, the importance of automatic non-contact tool setting using laser tool setter has been discussed. Also correct tool-setting methods in accordance with different tool shapes and sizes were defined and pocket features were machined by each of setting tools and measured by the inspection probe system to verify machining accuracy. Lastly we tried to demonstrate the superiority of laser tool setting systems by analyzing the cutting results when the CNC machining center was fitted with laser tool setting system.