Abstract: An improved tool holder for a metal removing machine includes a generally cylindrical head having a longitudinal passageway formed co-axially therethrough. The outer cylindrical surface of the head includes means for supporting one or more cutting tools thereon. The inner surface of the passageway formed through the head includes a threaded intermediate diameter portion and a relatively smaller diameter portion. An insert ring is disposed within the passageway at the junction of the intermediate and smaller diameter portions of the passageway. The insert ring includes a ramp surface which provides a smooth transition from the intermediate diameter portion to the relatively smaller diameter portion. A generally hollow cylindrical collet is provided which is sized to fit within the threaded intermediate portion of the passageway. The collet includes an enlarged end portion having a first chamfered edge adapted to abut the ramp surface of the insert ring when the collet is inserted in the passageway.