Milling experiments of Ti40 burn-resistant titanium alloy are performed using three kinds of polycrystalline diamond(PCD) tools with various diamond grain sizes (i.e., 0.5, 10 and 30 μm). The morphology of PCD tools after milling is observed using three-dimensional optical microscope and scanning electron microscopy. Failure mechanisms of PCD tools and their relation between various diamond grain sizes and tool wear are analyzed. The results indicate that the PCD tool life is longer when the contained diamond grain size is smaller. With the mechanical-thermal effects during milling, abrasion and adhesion are the main wear mechanisms of PCD tools. However, the main fracture mechanisms are micro-crack, micro-chipping and spalling of rake face and flank face, which usually take place at the position with a critical depth (i.e., 2.5—3.0 mm) in the initial wear stage. Local fragmentation occurs in the latter wear stage. Micro-cracks are the main factor leading to micro-chipping and spalling of tool rake face and flank face.