Using on-line monitoring during the CNC grinding process, the hazard case such as the crushing of grinding wheel and various safety accidents could be avoided, and the optimum time for dressing and replacing grinding wheel could also be determined, and hence, the service life of the grinding wheel could be prolonged and grinding quality could be improved. To overcome the limitation of some traditional techniques in which some parameters including the grinding power and force, torque and so on were monitored, the acoustic emission (AE) technique, which provides high sensitivity and responding speed, were developed in the present paper. The mechanism of AE during grinding was reviewed. Moreover, a virtual AE monitoring system, which could monitor the grinding state under different working conditions during the grinding, has been developed based on the Virtual Instruments technique. Some experiments were also performed on the internal grinder. The results showed that the AE signals became stronger with increasing the main shaft speed and grinding depth or decreasing the distance between the AE sensor and grinding area.