The electrochemical discharge drilling (ECDD) process is a hybrid technique combining electrochemical and electric discharge drilling, essential for machining advanced engineering materials like metal sheets, composites, and ceramics. This study introduces potassium permanganate (KMnO4) mixed with sodium hydroxide (NaOH) and potassium hydroxide (KOH) electrolytes to enhance the ECDD process. Key findings demonstrate that a 5% KMnO4 in 95% NaOH electrolyte significantly improves dimensional accuracy, achieving a hole diameter deviation of only 0.74% from the 1.75 mm tool electrode diameter. This mixture also minimizes stray corrosion and localized heating, enhancing precision. The highest material removal rate (MRR) of 3.33 mg/min was achieved with this combination, representing a 4.1% increase over plain NaOH. Additionally, the tool wear rate (TWR) was reduced by 70% to 5.5 mg/min. The reduced tool wear observed in this study might be attributed to probable tool surface modifications, including the formation of protective oxide layers and oxygenated functional groups. Such modifications can enhance heat dissipation and stabilize the tool–electrolyte interface, thereby contributing to improved tool performance. The interaction between KMnO4 and NaOH improved electrolyte stability, resulting in lower Heat Affected Zones (HAZs).