Understanding the effect of processing parameters on the tool electrode wear during micro-electrical discharge machining (micro-EDM) is helpful to predict and compensate the electrode wear, so as to improve the machining precision. In this paper, experiments are carried out and the influences of tool electrode diameter on the micro-EDM process are discussed based on the skin effect and area effect. It is demonstrated that the machining speed, tool wear, and taper rate are different with the increase of tool electrode diameter. Due to the skin effect and area effect, larger electrode diameter results in higher material removal rate along with higher tool wear rate. The electrode material removal increment is more than the workpiece material removal increment with the increase of tool electrode diameter, which leads to the increase of relative tool wear ratio. Discharge energy is concentrated on the tool surface which enhances the possibility of discharge on the side face and the corner of the tool electrode during the micro-EDM, especially when drilling with a larger tool electrode. As a result, a tool electrode with larger diameter results in a higher taper rate.