Use of sintered tool electrodes for surface alloying by electrical discharge alloying (EDA) process has emerged as an alternating machining option with a view to improve surface properties. The present study identifies the appropriate process parameter settings to machine high carbon tool steel (En31) for higher surface finish using copper-manganese (Cu-Mn) powder metallurgy (PM) tool electrode. The effect of six different process parameters was evaluated using Taguchi's experimental design and analysis of variance. The characterization of the surface alloyed with Mn and carbon was done by micro-hardness measurement, scanning electron microscope (SEM), atomic force microscope (AFM), energy dispersive x-ray spectrum (EDX) quantitative analysis and x-ray diffraction (XRD) technique. Also, the comparison was done with the surface machined using conventional Cu electrode. The surface machined with Cu-Mn PM tool electrode was found to be significantly alloyed with Mn and carbon having fewer micro-voids and no micro-cracks. Nano-size hillocks and valleys were found on the alloyed surface that is expected to improve the oil retention property of the surface. Presence of phases like Mn5C2 and Fe3C in the alloyed surface resulted in 95% and 33% higher microhardness than the base material and surface machined with conventional Cu electrode, respectively.