In this study, a new electrostatic field–induced electrolyte jet electrical discharge machining method has been proposed, which can automatically generate the tool electrode. Then, a series of experiments have been carried out to reveal the machining mechanism and test the machining ability of this method. The continuous observation experiments and the online current detection experiments have demonstrated that the electrolyte jet discharge machining is a pulsing, dynamic and cyclic process. Moreover, the 20-min time long reverse polarity experiments on the silicon surface have revealed that the machining is an electrical discharge machining process during the negative polarity machining; however, in the positive polarity machining, it is a hybrid electrical discharge machining and electrochemical machining process. Furthermore, the craters as small as 2 µm in diameter on stainless steel and silicon are produced by this electrolyte jet electrical discharge machining, which has proved the micro-machining ability of this method.