Abstract: The circular insert tool holder assembly for use with a circular tool post and for holding a resharpenable insert tool which has a top surface, a bottom surface, a front surface and a rear surface and having a cutting edge defined by the line formed by the intersection of the front surface and top surface of the insert tool, comprises a tool holder body, structure for rotatably mounting the tool holder body to the circular tool post, the tool holder body having a cavity therein, the cavity having an upper portion and a lower portion, the lower cavity portion being defined by an upper wall and a rear wall, and, a mechanism for retaining the insert tool within the upper cavity portion whereby the top surface of the insert tool is positioned along the upper wall of the cavity.