A cutting tool used for grooving and turning operations where a cutting insert is releasably securable in a tool holder. The cutting insert includes insert upper and lower surfaces, at least one of which includes an insert engagement arrangement having two converging insert engagement wedge surfaces. The tool holder includes an insert receiving slot having a clamping jaw surface and a base jaw lower surface, at least one of which includes a slot engagement arrangement having two converging slot engagement wedge surfaces. When assembled, the cutting insert is releasably clamped in the insert receiving slot. The at least one insert engagement arrangement abuts the at least one slot engagement arrangement only at the insert engagement wedge surfaces and the slot engagement wedge surfaces.