The paper presents a study of Rotary Electrical Discharge Machining (REDM) process. In REDM, simple shaped cylindrical electrodes are used to generate 3D complex shapes. A theoretical model of machining process is described, which takes into consideration the effect of tool electrode wear on machined surface profile. The software for computer simulation of REDM has been developed. In the paper, the effects of machining parameters on shape error of machined surface are discussed. Results of computer simulation have been confirmed in experimental practice. The simulation model for NC contouring REDM may also be applied to solving numerical control problems and optimization of tool electrode path.