Nickel-titanium-based NiTi shape memory alloys (SMA) have many industrial applications. However, µ-machining of NiTi SMA poses a significant problem because of an unfavorable combination of shape memory effect and super elasticity. It is challenging to produce µ-channel with dimensionally better accuracy in the NiTi SMA using conventional machining methods. µ-electric discharge machining (µ-EDM) has gained popularity as a machining method for creating µ-channels in a variety of engineering materials. Despite the widespread use of µ-EDM to create µ-channels in hard-to-cut materials, choosing an appropriate tool material is crucial for making the µ-channel with dimensionally accurate features. The effect of five different tool materials, copper (Cu), tungsten-copper (WCu), brass (Br), high-speed steel (HSS), and barium-copper (BaCu), on the machining performance is investigated in this experimental endeavor. The experiments are replicated three times with each electrode to produce the µ-channels. The µ-milling operation is performed using sesame oil mixed with 2 g/l nickel nanopowder as a dielectric medium. The effect of the tool materials on the dimensional deviation and machining time is studied to evaluate the performance of the different tool materials. The surface morphology of the produced µ-channel is also explored using a field emission scanning electron microscope (FESEM) and energy dispersive X-ray spectroscopy (EDS). After machining, the performance of the different tool materials is analyzed to find the best tool material for µ-ED milling of NiTi SMA.