Development of cylinder liner for internal combustion engines is a challenging task and it involves a thorough understanding of interaction between functional requirements of liners, performance of honing process and desired surface characteristics. In the present work, an attempt is made to bring out the relation between performance of honing process and surface characteristics with the condition of the honing tools. Signals from multiple sensors during rough, finish and plateau operations with fresh or worn out tools show a good correlation between honing tool condition and performance measures such as material removal and surface topography. A strange phenomenon of reduced amplitude in power spectrum of vibration signals occurring with worn out tools is explained. On comparing the acoustic emission (AE) signals and the signals obtained from piezoelectric cutting force dynamometer and accelerometer, it is found that the signals obtained from AE sensor show higher sensitivity in terms of performance measures. A tool condition monitoring strategy which considers all three sensors including AE sensor is proposed in this paper. Such a strategy would help in the timely replacement of the honing tools, thereby enhancing the productivity.