Direct milling of tool steels in the hardened state has considerable economic and positive environmental potential. To incorporate this feature in the next generation of tool steels without the loss of critical properties, it is proposed to investigate both hot (type H13) and cold working (type D2) steels using innovative methods in steel modification and hard milling. Limits to steel modification through different approaches on hard machinability and application properties will be highlighted. The results will be used to develop the next generation of tool steels designed for economic machining even in the hardened state.