In micro electro-discharge machining (micro-EDM), it is believed that electrical conductivity of the dielectric modified by additives plays an important role in discharge initiation and electrical breakdown, thereby affecting the process characteristics including process accuracy, material removal rate (MRR), and surface finish. However, there has been a lack of systematic efforts to evaluate the effect of dielectric conductivity in micro-EDM. This paper investigates the role of electrical conductivity of the dielectric on the breakdown, plasma characteristics, and material removal in micro-EDM via modeling and experimentation. Experiments have been carried out at four levels of electrical conductivity of saline water, i.e., 4 μS/cm, 362 μS/cm, 1106 μS/cm, and 4116 μS/cm, to study electrical breakdown of the dielectric and resulting craters. A global modeling approach is employed to model the micro-EDM plasma in saline water and predict the effect of dielectric conductivity on electron density, plasma temperature, heat flux to anode, plasma resistance, and discharge energy. It is found from both experiments and model-based simulations that increase in the dielectric conductivity facilitates the electrical breakdown of the dielectric by lowering the minimum breakdown potential at a given interelectrode gap. Experimental results also show increase in the volume of material removed per discharge when dielectric conductivity is increased, which is attributed to the increase in anode heat flux predicted by the micro-EDM plasma model. The model also predicts increase in electron density, decrease in plasma resistance, and decrease in discharge energy as the dielectric conductivity increases.