The construction and performance of an updated gas source precision ion milling system are described. The system is based on an existing focused ion beam machine which is able to image and mill selected areas of specimens that are too thick for TEM studies. The specimen image is formed using either secondary electrons or secondary ions, captured by a dual detector. The work chamber consists of three major components: the ion gun, the ion column and the specimen chamber. The ion gun is an electron impact ionization type with an optimized source size and allows the use of variety of gases. The updated system employs an objective lens with shorter focal length to enhance the resolution. The specimen chamber with an improved specimen eucentric stage, accepts side entry TEM specimen holders. This enables the specimen to move between the TEM and the instrument for further precision thinning as required without removal of the specimen from the holder and consequent risk of damage. The upgraded system resolves features <1μm in thickness. Its point milling rate for Ni is 1.4μm/min. The ability of the instrument for imaging and localized milling is demonstrated by a number of TEM images of semiconductors, metals, ceramics and composites.