Abstract This paper presents a novel real-time interpolation technique for five-axis machine tools to attain higher speed and accuracy. To realize computationally efficient real-time interpolation of 6-DOF tool motion, a joint workpiece–machine coordinate system interpolation scheme is proposed. Cartesian motion of the tool center point (TCP) is interpolated in the workpiece coordinate system (WCS), whereas tool orientation is interpolated in the machine coordinate system (MCS) based on the finite impulse response filtering. Such an approach provides several advantages: (i) it eliminates the need for complex real-time spherical interpolation techniques, (ii) facilitates efficient use of slower rotary drive kinematics to compensate for the dynamic mismatch between Cartesian and rotary axes and achieve higher tool acceleration, and (iii) mitigates feed fluctuations while interpolating near kinematic singularities. To take advantage of such benefits and realize accurate joint WCS–MCS interpolation scheme, tool orientation interpolation errors are analyzed. A novel approach is developed to adaptively discretize long linear tool moves and confine interpolation errors within user set tolerances. Synchronization errors between TCP and tool orientation are also characterized, and peak synchronization error level is determined to guide the interpolation parameter selection. Finally, blending errors during non-stop continuous interpolation of linear toolpaths are modeled and confined. Advantages of the proposed interpolation scheme are demonstrated through simulation studies and validated experimentally. Overall, proposed technique can improve cycle times up to 10% while providing smooth and accurate non-stop real-time interpolation of tool motion in five-axis machining.