In this work an attempt is made to design and fabricate a low cost dynamometer for measuring cutting forces in three directions in a CNC vertical milling machine. The dynamometer is designed and fabricated to withstand load up to 5000 N along ‘X’, ‘Y’ and ‘Z’ axis. Milling dynamometer developed in this work, consists of four octagonal rings as an elastic member on which strain gauges are mounted for measuring the cutting forces. Suitable materials for the fixture and for the octagonal rings are chosen for constructing the dynamometer. Structural analysis has been carried out to check the safe design of the dynamometer assembly consisting of fixture and the octagonal rings for the maximum loading conditions. Static calibration of the dynamometer is carried out using slotted weight method by simulating the actual conditions. Calibration chart was prepared for three directions by relating load and corresponding strain. The proposed arrangement has been interfaced using NI data acquisition system for measuring the cutting forces. The dynamometer developed in this work is validated by conducting experimental trials. This low cost dynamometer is capable of measuring cutting forces in all three directions.