A tool holder includes a coolant cavity opening out to a cavity inlet and outlet openings. The coolant cavity includes a cavity upper surface which extends along a cavity central axis. The cavity upper surface includes a cavity widening surface firstly which decreases in distance from the holder peripheral surface and secondly along which the cavity cross-sectional area increases, both with increasing distance from the cavity inlet opening. The cavity upper surface also includes a cavity narrowing surface, located further from the cavity inlet opening than the cavity widening surface, firstly which increases in distance from the holder peripheral surface and secondly along which the cavity cross-sectional area decreases, with increasing distance from the cavity inlet opening. A cutting tool is provided having a cutting insert releasably attached to the tool holder.