A 1/3 fractional factorial design of experiment with four factors at three levels was used to investigate drilling of multi-directional AS4/PEEK composites. The design of experiment was conducted to determine the main effects and two factor interactions of drill point angle, cutting speed, feed rate, and drill material on acoustic emission generated in drilling and drilled hole exit delamination. Drill material, feedrate, cutting speed, and drill point angle were found to have statistically significant effects on total and average acoustic emission energy generated which also depends on the location of the acoustic emission spectra (on the workpiece or on the drilling fixture). Drill material was found to have the most significant effect on exit hold delamination, and accounted for over 50% of the variation in the measured exit hole delamination. Carbide drills were found to produce the least amount of exit hold delamination throughout the range of speeds investigated followed by Polycrystalline Diamond drills, while High Speed Steel Cobalt drills were found to produce holes with the greatest amount of exit hold delamination.