This paper presents a novel approach for obtaining thermal data from the close vicinity (70–700 μm) of the tool-workpiece interface while machining hardened steel. Arrays of microthin film C-type thermocouples with a junction size of 5 μm × 5 μm were fabricated by standard microfabrication methods and have been successfully embedded into polycrystalline cubic boron nitride (PCBN) using a diffusion bonding technique. Scanning electron microscopy (SEM) and energy dispersive X-ray spectroscopy (EDS) were performed to examine material interactions at the bonding interface in order to determine optimal bonding parameters. Static and dynamic sensor performances have been characterized. The sensors exhibit excellent linearity up to 1300 °C, fast rise time of 150 ns, and sensitivity of ∼19 μV/ °C. The PCBN inserts instrumented with embedded thin film C-type thermocouples were successfully applied to measure internal tool temperatures as close as 70 μm to the cutting edge while machining hardened steel workpieces at industrially relevant cutting conditions. Correlations between temperature and cutting parameters have been established. The embedded microthin film sensor array provided unprecedented temporal and spatial resolution as well as high accuracy for microscale transient tool-internal temperature field measurements. Tool-internal temperature maps were generated from acquired data. In the frequency domain, obtained thermal data indicated the onset of regenerative machining chatter earlier and more effective than conventional force measurement by dynamometer.