In grinding operation, on-line process monitoring of dressing will ensure the quality of the grinding wheel and will achieve reproducible surface finish. The results of a study conducted to evaluate the feasibility and effectiveness of Acoustic Emission (AE) sensors in online monitoring of dressing is reported. Two aspects of the process are addressed. The first is the detection of undesired wheel conditions, such as an out-of-round wheel and wheel contour errors. The other is improving the surface finish of the ground workpiece by monitoring the dressing parameters. Experimental results indicate that AE signal can be effectively used to identify the faults that might occur during dressing. This in turn will result in better surface finish in the machined workpiece.