In order to machine a wide variety of materials with a single spindle and setup, a multi-purpose spindle for machine tools has been developed. The spindle achieves both high power/ torque for heavy duty milling operations and higher rotational speed. The developed spindle is equipped with an additional motor at the back of a conventional induction motor driven spindle to assist the induction motor when high milling torque is needed. For high speed operation, the additional motor can be mechanically disengaged and the spindle can be used as a conventional spindle. A Permanent Magnet Synchronous Motor (PMSM) is adopted for the additional motor, because a highly stable milling operation can be realized by utilizing the advantage of the PMSM. As expected, cutting experiments have shown that the material removal rate has been greatly improved with the developed spindle. Also it was found that machining with the spindle resulted in longer tool life in comparison to machining by the conventional spindle, which is possible through the stability improvement provided by the PMSM torque assistance. A simulation study was also conducted in order to investigate the characteristics of the PMSM and the induction motor used in the dual driven spindle. The results indicated that the PMSM provides a highly stable milling process and a very high performance spindle can be achieved only with a PMSM. Therefore, a high performance built-in PMSM spindle has been developed and introduced in this paper. The PMSM spindle achieves a high bandwidth, and the rotational dynamics of the spindle can also be easily adjusted by introducing a variable dynamic software control for optimizing the cutting process. The experiments suggested that there are optimum setup parameters for the spindle driver in order to maximize the tool life.