Micro-EDM is a versatile technique for fabricating various microfeatures, such as microholes, microchannels, and 3D features on any metallic surface. Microchannel fabrication remained one of the critical topics in micromachining due to its extensive application in microfluidics, bio-medical, etc. In general, cylindrical microtools are extensively opted by researchers for microchannel fabrication. The current paper investigated the effect of the size and shape of the microtools during microchannel fabrication on SS304. Four microchannels were fabricated using different microtools of varying shapes (cylindrical and cut-edge) and sizes (with approximate diameters of 200 μm and 100 μm). Fabricated microchannels were compared based on their lateral overcut, frontal overcut, channel depth, and surface roughness (Ra). The lateral overcut was less than the frontal overcut. However, both could be improved by employing cut-edge microtools. Cylindrical microtools were used to fabricate microchannels with wide bottoms and parallel walls. A reduction in the microtool diameter decreased the microchannel depth due to increase in longitudinal tool wear. The cylindrical microtool with a larger diameter fabricated microchannels with the least surface roughness. Employing cut-edge microtools instead of cylindrical microtools increased the tungsten deposition and decreased the carbon deposition on the microchannel surface. Reduction in the microtool diameter increased the tungsten deposition and decreased the carbon deposition due to the increased longitudinal tool wear and fall in the microchannel depth, respectively.