Coaxial alignment is an important process in the machining of cylindrical-shape miniature components with an inner bore. It requires aligning the axis of the inner bore with respect to the machine rotational axis precisely. In this paper, we present a spindle with automated coaxial alignment capability for machining applications of the components such as ferrules and capillaries. This spindle includes a novel orientation-adjustable mechanism and a vision-guided feedback system. The adjustment mechanism consists of two pieces of flexural bearings, which can provide the spindle with 4 DOF adjustments without any backlash. The vision-guided feedback system comprises the component face image processing and the through-bore light intensity processing, both of which provide the information of translational and angular offsets. A prototype of the spindle was built to verify the technology we developed. The results show that the system can achieve superior coaxial alignment performances.