Tool Condition Monitoring systems are essential to achieve the desired industrial competitive advantage in terms of reducing costs, increasing productivity, improving quality, and preventing machined part damage. A sudden tool failure is analytically unpredictable due to the high dynamics of the machining process in the industrial environment. Therefore, a system for detecting and preventing sudden tool failures was developed for real-time implementation. A discrete wavelet transform lifting scheme (DWT) was developed to extract a time-frequency representation of the AErms signals. A long short-term memory (LSTM) autoencoder was developed to compress and reconstruct the DWT features. The variations between the reconstructed and the original DWT representations due to the induced acoustic emissions (AE) waves during unstable crack propagation were used as a prefailure indicator. Based on the statistics of the LSTM autoencoder training process, a threshold was defined to detect tool prefailure regardless of the cutting conditions. Experimental validation results demonstrated the ability of the developed approach to accurately predict sudden tool failures before they occur and allow enough time to take corrective action to protect the machined part. The developed approach overcomes the limitations of the prefailure detection approach available in the literature in terms of defining a threshold function and sensitivity to chip adhesion-separation phenomenon during the machining of hard-to-cut materials.