Abstract: A retractable drill bit system (10) comprises a drive sub (18) which is adapted for connection to a lower end of a drill (12), a tool (20) for installing and retractable drill bit segments (22) from the drive sub (18); and an insert (24) for selectively locking the bit segments (22) to an end of the drive sub (18) and releasing the bit segments (22). A plurality of recesses (5B) are formed about an inner circumferential wall at one end of the drive sub (18) and a landing seat (32) formed about the inner wall upstream of the recesses (58). The area of the interior wall between the landing seat (32) and recesses (58) is profiled with a series of tapered and level surfaces. The tool (20) includes a slidable cradle (176) extending from one end about which the bit segments (22) are held during installation and retrieval. The bit segments (22) being held in place about the cradle by an elastic band (198).