A veneer cutting and sorting apparatus is disclosed. The apparatus includes a revolvable knife blade having a cutting edge and a revolvable knife edge receiver having a cutting edge receiving surface. The knife blade cuts a veneer sheet as peeled from a peeler block by a veneer lathe at a previously detected boundary between defective veneer portion and product veneer sheet on the cutting edge receiving surface then revolving at the same peripheral speed as the cutting edge of the knife blade. Cut-off defective portion is allowed to drop off by its own weight.