We have designed tungsten carbide tools with a new binder, which makes them suitable for advanced diamond tool coatings. The new tool substrates, made of tungsten carbide and nickel aluminide as binder phase, are produced by sintering and hot isostatic pressing, and also by combustion synthesis. The high temperature strength of nickel aluminide is key to superior tool performance at elevated temperatures. More importantly, nickel aluminides reduce the formation of graphite and promote diamond growth during chemical vapor deposition. Diamond films are deposited on the new tool substrates to investigate the nucleation density, adhesion, and wear resistance. The diamond coatings are characterized by scanning electron microscopy and Raman spectroscopy. The graphitizing tendency due to cobalt in the tungsten carbide tools was found to be a limitation to improve adhesion of diamond films. The new tool substrates with nickel aluminide binder have been found to exhibit good adhesion and wear resistance. The implications of these results in advanced cutting tools are discussed.