Strength and fracture toughness of ceramic tool materials can be enhanced by adding ductile phases. However, the hardness will be decreased, which is undesirable especially for cutting tool materials. Combining with functionally gradient materials (FGMs), the mechanical properties can be tailored so as to achieve high hardness at the outside of the ceramic materials leaving a relatively tough core inside. In this paper, a Si3N4/(W, Ti)C/Co graded composite ceramic tool material was fabricated by hot pressing technique. The composites without Co were used as the surface layers and the composites containing Co were used as the inner layers. Subsequently, the cutting performance of the graded ceramic cutting tool in turning iron-based high temperature alloy GH2132 was studied in comparison with common reference tool. The cutting forces, cutting temperature, tool wear modes and failure mechanisms were discussed. Results revealed that the resultant cutting forces firstly decrease and then increase with the increase of cutting speed, while the maximum cutting temperature increases gradually. Tool live of the FGM tool exceeds that of the corresponding common ceramic tool with the same composition systems. Formation of the residual compressive stress in the surface layer induced by the graded structure contributed to the longer tool life. The main failure modes of the FGM tool were adhesion, groove wear on the rake face and notch wear on the flank face. The graded tool shows better notch wear resistance than the common reference tool.