Abstract: A method for manufacturing machining tools out of composite powdered metal which is first formed to approximate the desired shape of the machining tool; then bonded metallurgically; and machined to the desired finished shape. Desirably, the forming step employs at least two distinct powdered metals, the first formed to the outer shape over the portion of the tool that interfaces with the work piece and selected to exhibit the desired hardness and wear-resistance properties. The second material supports the hollow form of the first material and includes a shank to interface with the machine that the tool will be employed with. The second material is chosen to exhibit the desired ductility, surface hardness, abrasion resistance and reduced cost. Additional materials can be used for different facets of the tool to obtain an optimum balance of long life, efficient operation and low cost.