A machine shop or engineering workshop is a room, building, or company where machining, a form of subtractive manufacturing, is done. In a machine shop, machinists use machine tools and cutting tools to make parts, usually of metal or plastic (but sometimes of other materials such as glass or wood). A machine shop can be a small business (such as a job shop) or a portion of a factory, whether a toolroom or a production area for manufacturing. The building construction and the layout of the place and equipment vary, and are specific to the shop; for instance, the flooring in one shop may be concrete, or even compacted dirt, and another shop may have asphalt floors. A shop may be air-conditioned or not; but in other shops it may be necessary to maintain a controlled climate. Each shop has its own tools and machinery which differ from other shops in quantity, capability and focus of expertise.

The parts produced can be the end product of the factory, to be sold to customers in the machine industry, the car industry, the aircraft industry, or others. It may encompass the frequent machining of customized components. In other cases, companies in those fields have their own machine shops.

The production can consist of cutting, shaping, drilling, finishing, and other processes, frequently those related to metalworking. The machine tools typically include metal lathes, milling machines, machining centers, multitasking machines, drill presses, or grinding machines, many controlled with computer numerical control (CNC). Other processes, such as heat treating, electroplating, or painting of the parts before or after machining, are often done in a separate facility.

A machine shop can contain some raw materials (such as bar stock for machining) and an inventory of finished parts. These items are often stored in a warehouse. The control and traceability of the materials usually depend on the company's management and the industries that are served, standard certification of the establishment, and stewardship.

A machine shop can be a capital intensive business, because the purchase of equipment can require large investments. A machine shop can also be labour-intensive, especially if it is specialized in repairing machinery on a job production basis, but production machining (both batch production and mass production) is much more automated than it was before the development of CNC, programmable logic control (PLC), microcomputers, and robotics. It no longer requires masses of workers, although the jobs that remain tend to require high talent and skill. Training and experience in a machine shop can both be scarce and valuable.

Methodology, such as the practice of 5S, the level of compliance over safety practices and the use of personal protective equipment by the personnel, as well as the frequency of maintenance to the machines and how stringent housekeeping is performed in a shop, may vary widely from one shop to another.

The first machine shops started to appear in the 19th century when the Industrial Revolution was already long underway. Before the industrial revolution parts and tools were produced in workshops in local villages and cities on small-scale often for a local market. The first machinery that made possible the Industrial Revolution were also developed in similar workshops.

The production machines in the first factories were built on site, where every part was still individually made to fit. After some time those factories started their own workshops, where parts of the existing machinery were repaired or modified. In those days textiles were the dominant industry, and these industries started to further develop their own machine tools.