Design of machine tools and particularly design of precision machine tools are among the most important aspects of manufacturing engineering in industrial countries. All goods are directly or indirectly made by machine tools. Due to importance of the subject, general principles of precision machine design with a focus on the design of an incremental forming machine are discussed. Incremental forming machine is a forming machine tool which is mainly used to form sheet metals. In practice a forming tool which is usually roller type is rotated around an axis by means of hydraulic actuator. This axis of rotation is usually perpendicular to spindle axis of the machine and also can travel along longitudinal direction. The roller tip is forced to contact with the work piece which might be heated up to red hot conditions. Hence rotationally symmetric parts can be produced by this method. The entire machine is modeled using a CAD package and also principles and techniques of machine tool design such as precision machine design, machine tool alignment, design for manufacturing, sealing mechanisms, design of sliding bearings and selection of rolling bearings are explained. The design process is divided into conceptual design, machine stiffness and fatigue strength check of individual elements. The shape and dimension of main parts are designed to have maximum stiffness and optimum mass using a CAE package. At the end hydraulic system and its important elements are investigated.