A virtual machine tool, a computer simulation model of the machine motion and cutting process with a level of accuracy and consistency that can replace an accurate machine tool, is one of the critical digital transformation technologies in the manufacturing industry. During the machine development phase, cost and time can be reduced by evaluating machining efficiency and quality through virtual prototyping. In the machine application phase, virtual machine tools can be used to accurately assess the condition of equipment and processes by analyzing actual data combined with simulated data. This paper introduces a virtual machine tool system that can analyze the behavior of an accurate machine tool by integrating physical models of structure, numerical controller, and cutting process. The key features of the virtual machine tool, synchronous machining simulation, machining stability detection, machining error estimation, and part program optimization, were evaluated through various machining tests with a vertical 3-axis milling machine.