To analyze milling chatter stability lobes and surface location error with worn tools, the cutting force coefficients under different worn conditions are identified using the full-discrete method. The stable critical cutting depth of the milling system increases after normal wear, and gradually declines as the work piece surface hardness increases. Then, the difference in the critical cutting depth between the normal wear tool and the wear free tool flank gradually becomes small. In addition, surface location error appears in some stable regions. Experimental results prove that the theoretical model can effectively optimize machining parameters with varying wear loss of the milling cutter.