The Taguchi method is regarded as a powerful tool to design optimization for quality. In this study, it was used to find the optimal cutting parameters for precision-drilling operations. The cutting parameters include guiding drilling, spindle speed, feed rate, stepping amount, number of steps and cutting fluid. The considered characteristics of performance are tool life, and the variation of drilled hole-diameter. Taguchi Method and Orthogonal Array were applied to the experiments of precision-drilling so as to allocate the corresponding processing parameters. The obtained results were then evaluated by Response Table, Response Chart, and Analysis of Variance methods (ANOVA) to acquire the optimal processing parameters. These were further confirmed by experiment. Finally, the analysis of the precision-drilling process applied for mold steel SKD61 shows that this approach can greatly improve the drilling performance of a small-drilling process.