A cutting tool includes a tool holding system having a clamping portion. The clamping portion includes an integrally formed one-piece inner coupling member that at least partially forms a clamping sleeve portion having a clamping bore for clampingly receiving a cutting insert. The clamping portion also includes an integrally formed one-piece outer coupling member that is circumferentially disposed about at least a portion of the inner coupling member. The tool holding system also has a mounting portion that is connected to one of the inner and outer coupling members. The inner and outer coupling members are captively and non-releasably engaged with each other via inter-engaged first and second engagement surfaces that are slidingly displaceable with respect to each other.