Sharpness affects the performance of a wood cutting tool, particularly the surface finish and cutting forces on the wood. Because the mechanisms involved with cutting wood are not well understood, the amount of cutter sharpness required to produce a high quality cutting edge is not defined. An optimum economic sharpness for a cutter is when any increase in benefit from making the cutter sharper is less than the increase in cost of sharpening. This paper details a hybrid cellular/macroscopic finite element analysis of wood during the cutting process. Different radii were applied to the cutting edge to simulate different sharpnesses. It was found that the interaction between cutter and wood changed as the cutter was sharpened. A changeover point between two cutting mechanisms occurred when the radius of the cutting edge was less than the radius of curvature of the wood fibres in bending. Below this radius, the cutter acted a point load, above this radius, the cutter distributed its force around the radius. The cutting forces for Pinus radiata in the LR direction were experimentally measured. The empirical results confirmed the validity of the model.