Carbon Fiber-Reinforced Polymers (CFRP) present machining challenges due to inherent properties such as inhomogeneity and anisotropy, which make them vulnerable to damage during drilling. This study investigates the machining-induced damage caused by drilling CFRP composite laminates under dry and cryogenic conditions, considering the impact of cutting speeds, feed rates, and tool coatings on thrust force, delamination, and surface roughness. Acoustic Emission (AE) measurements are also performed to investigate machining-induced damage at different stages of the machining process. The experimental results show that machining-induced damage is significantly reduced under cryogenic conditions compared to dry drilling. Under cryogenic conditions, the combination of high feed rates and cutting speeds resulted in a 13.2% reduction in average delamination factor, a 10.5% improvement in surface roughness, and a 43.4% decrease in acoustic emission RMS compared to dry drilling. A scanning electron microscope (SEM) and a 3D surface profilometer are also used to assess machining-induced damage to the hole wall surface under dry and cryogenic conditions.