There is a growing demand for highly accurate micro-scale parts from various industries including medical, biotechnology, energy, consumer, and aerospace. Mechanical micro-machining which is capable of fabricating three dimensional micro-scale features on a wide range of engineering materials such as metals, polymers, ceramics and composites is a viable micro-manufacturing technique to effectively address this demand. Miniature machine tools (MMTs) are developed and used in mechanical micro-machining since their small size improves the accuracy and efficiency of the process. The output quality of the final product manufactured on an MMT depends on choosing the optimum machining parameters. However, the full potential of micro-machining can not be achieved due to challenges that reduce the repeatability of the process. One of the most significant challenges in micro-machining is the deterioration of output quality due to the MMT vibrations. This thesis demonstrates the development of a threeaxis miniature machine tool, the performance evaluation of its micro-scale milling process, and the characterization of its dynamic behaviour using finite element simulations and experiments. The MMT is designed and constructed using precision three-axis positioning slides (2 micrometers positioning accuracy, 10 nanometers positioning resolution, 60 mm x 60 mm x 60 mm workspace), miniature ultra-high speed spindles (ceramic bearing electrical spindle with maximum 50,000 rpm rotational speed and air bearing air turbine spindle with maximum 160,000 rpm rotational speed), a miniature force dynamometer, and a microscope. Three dimensional finite element simulations are performed on the developed MMT to obtain the static and dynamic characteristics of the spindle side. A maximum static deflection of 0.256 µm is obtained on the designed base when 20 N forces in three directions are applied to the center of the spindle. Dynamic finite element analysis predicts the first three natural frequencies as 700 Hz, 828 Hz and 1896 Hz; hence corresponding spindle speeds should be avoided for successful application of micro-machining. To demonstrate the capability of MMT for manufacturing three dimensional (3D) features, micro-milling is proposed as a novel method for fabricating Poly(methyl methacrylate) (PMMA) and poly(lactic-co-glycolic acid) (PLGA) polymer micro-needles. The micro-machinability of PMMA and PLGA polymers is investigated experimentally by machining a group of 3 mm length and 100 µm depth slots using 50,000 and 100,000 rpm spindle speeds with different feedrates (5, 10, 15, and 20 µm/flute). The micro-machinability study concludes that PLGA has better machinability than PMMA. It is also observed that the machining parameters of 50,000 rpm spindle speed and 20 µm/flute feedrate give better output quality. Using these machining parameters, micro needles with different geometries are successfully manufactured from PMMA and PLGA polymers. During this study, it is observed that polymer pillars bend due to machining forces and vibrations, which causes dimensional errors. To address the deterioration of the output quality due to vibrations stemming from machining forces and high-speed-rotations, MMT vibrations particularly focusing on the spindle side dynamics are investigated experimentally using runout (spindle axis offset) measurements and experimental modal analysis techniques. The results are compared with those from three-dimensional finite element simulations. The investigation of MMT vibrations indicates that the developed MMT is convenient for accurate applications of micro-machining using air-turbine air bearing spindle. However, the selection of the operation frequencies for electrical spindle is challenging at certain speeds with this design because most of the critical natural frequencies of the developed MMT appear in the operating frequency range of electrical spindle. Runout measurements using two laser doppler vibrometer (LDV) systems and experimental modal analyis which utilizes an impact hammer and accelerometer are conducted to obtain spindle side dynamics. Runout measurements performed on the miniature ultra-high speed ceramic bearing electrical spindle show that both magnitude and shape of the runout errors vary considerably with spindle speed. A peak of 1.62 µm synchronous runout is observed at 15,000 rpm. Asynchronous runout errors become significant between spindle speeds of 40,000 and 50,000 rpm and reach to a maximum of 0.21 µm at 45,000 rpm. On the other hand, experimental modal analysis is conducted to obtain both the steady-state and speed dependent frequency response functions (FRFs) of the mechanical structures. Steady state FRFs indicate that 750 Hz and 850 Hz are two important natural frequencies for successful application of micro-machining. Compared to the three dimensional finite element simulations, there is 7 % difference for the first mode and 3 % difference for the second mode. Both steady-state experimental modal analysis and finite element simulations could not consider the speed-dependent dynamics. Therefore, experimental modal analysis at different spindle speeds is also performed and it is concluded that natural frequencies of the mechanical structures change significantly depending on spindle speed. Speed-dependent FRFs show that the maximum response of about 0.35 µm/N is obtained while the spindle is rotating at 16,000 rpm but the peak occurs at 24,000 rpm (400 Hz). In addition, the vibration amplitude grows between the spindle speed of 40,000 rpm and 50,000 rpm. Experiments and finite element simulations provide a machine operation frequency selection guide. It is suggested to avoid two different spindle speed ranges (15,000- 25,000 rpm and 40,000-50,000 rpm) to prevent vibration related inaccuracies. In addition, structural modifications can be achieved to further optimize the design based on the experimental data obtained in this work. The obtained experimental data can be used to derive mathematical model of the MMT and to perform stability studies to increase the productivity of the micro-machining processes. Overall, the novel micro-machining technique tested on the developed MMT highlights the quality and ranges that can be achieved in micro-manufacturing.