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This paper presents an innovative method for active control of chatter instability induced by regenerative effect in lathe machines. To decrease chatter vibration, a piezoelectric actuator along with a controller with a comprehensive transfer function format is designed and added to the lathe machine. The theory of orthogonal chatter is presented by illustrating its dynamics in Laplace domain, which leads to stability lobes diagram that distinguishes stable cutting operation from unstable machining. Piezoelectric actuator formulation is simplified for the particular case under study. Effect of different parameters on the displacement of stability lobe is studied. The concept of this new controlling strategy is increasing the maximum depth of cut for a specific speed of machining process by moving stability lobes in both vertical and horizontal direction and also based on minimum energy consumption. Genetic Algorithm method is utilized for calculating controller coefficients.