This paper describes a new surface modification method by Electrical Discharge Machining (EDM) to create a hard ceramic layer on the workpiece. When a kind of metallic material that makes hard carbide is used as an electrode of EDM, hard ceramic layer can be deposited in a certain condition in the process of EDM. In this paper, characteristics of the layer and the application of this method to cutting tools are discussed. First, the principle of this surface modification method is shown. Secondly, the characteristics of the layer are studied in detail. Through the discuss of wear characteristics of the electrode and formation characteristics of the layer, it can be found that there are some distinct differences between the traditional EDM technology and this new EDM surface modification method. Thirdly, the micro-hardness test of the layer at the different distance from the base metal is carried out. It shows that there is a hard area also under the surface of base metal. At last, as an application of EDM surface modification method, cutting test of cutting tools is done, and it confirms that the life of the cutting tool by EDM surface modification is much longer than that of without layer.