In one aspect, tool holders employing axial sleeves and dampening elements are described herein. Tool holders described herein define a central longitudinal axis and comprise a tool holder body having a connector portion and a holder portion. The connector portion is structured to engage a rotary machine and the holder portion is disposed opposite the connector portion and has an inner diameter surface comprising a plurality of axial grooves. Tool holders described herein further comprise a tool receiver structured to receive at least a portion of a cutting tool, the tool receiver having an outer diameter surface comprising a plurality of axial grooves. The tool receiver is mounted in the holder portion so as to align the axial grooves of the inner and outer diameter surfaces and define axial sleeves filled with dampening elements.