Compacted graphite cast iron (CG1) has been the material for high-power diesel engines recently, but its increased strength causes poor machinability. In this study, coated and uncoated carbide tools were used in dry milling experiment and FEM simulation to study the machinability of CGI and wear behaviour of tools. The experimental and FEM simulation results show that coated tool has great advantage in dry milling of CGI. SEM and EDS analysis of tool wear indicate the wear morphology and wear mechanism. Adhesive wear is the main mechanism to cause un- coated tool wear, while abrasive wear and delamination wear are the main mechanism to cause coated tool wear. Stress and temperature distribution in FEM simulation help to understand the wear mechanism including the reason for coat- ing peeled off.