The purpose of this study is to develop the new tool that can generate compressive residual stress on the machined surface simultaneously with the milling process. The compressive residual stress generated on the machined surface is expected to improve the fatigue strength and the resistance to stress corrosion cracking. Generally, the residual stress within the machined surface is tensile after milling process. In order to obtain high fatigue strength and resistance to stress corrosion cracking, shot peening process is applied after milling process. However, the shot peening process is inefficient. The developed tool has a projection pin made of carbide at the top center of end mill type tool. This pin protrudes 0.1mm in axial direction from cutting edges of the tool. Cutting edges of the developed tool remove extra material, then projection pin compress and make a plastic flow surfacing of the milling surface simultaneously with the milling process. As a result of this study, following basic performance of the developed tool were verified. (1) Compressive residual stress generated on machined surface is more than that of comparable to shot peening process. (2) Surface roughness is less than 1 micron. (3) The work hardening layer generated on the surface is about 0.1mm thickness.