The characteristics of cutting forces and hole quality in reaming aluminum casting alloy ZL102 using a polycrystalline diamond (PCD) step reamer under wet and dry cutting conditions were studied experimentally. Cutting forces were measured by a Kistler Dynamometer during reaming process and were analyzed by fast Fourier transformation (FFT) method. Hole quality was evaluated by hole diameter and surface roughness. Results show that both cutting torque and thrust force had different characteristic with increasing spindle speed in dry and wet conditions. Holes finished in dry cutting condition were usually larger than that finished in wet cutting condition. The surface roughness values had no obvious change with increasing spindle speed in wet cutting condition. But, in dry condition, the surface roughness deteriorated sharply with spindle speed reaching 8000 rpm. Based on the study, the PCD step reamer had great performance in obtaining precise hole diameter and smooth surface for reaming step holes on ZL102 alloy under high spindle speed approximately 10,000 rpm in wet cutting condition. Cutting fluid was greatly beneficial to stabilize the cutting process and was helpful to improve hole quality on step hole reaming process. In addition, the PCD step reamer was also suitable to machine ZL102 when spindle speed is within 6000 rpm in dry cutting condition.