Abstract: An air tool monitoring apparatus includes a housing having a hollow chamber formed therein, and also having an inlet and an outlet formed therein, each of the inlet and an outlet in fluid communication with the chamber. The apparatus also includes a first sensor for sensing a condition indicative of tool usage, a battery disposed in the housing, and a microprocessor operatively connected to the housing and including a timer, a memory storage module, and a unique identifier. The apparatus further includes a switch for starting and stopping the timer, and a communication device for sending data from the microprocessor to a data collection device. The apparatus may additionally include a second sensor for sensing a condition indicative of tool wear. Methods of using the apparatus, along with systems for monitoring and reporting on usage of multiple air tools equipped with the apparatus, are also described.