The development of computer-aided design (CAD) and computer-aided manufacturing (CAM) has advanced to the stage where NC (numerically controlled) codes can be automatically generated for components created using a CAD model; however, there still remains a gap between the CAD/CAM environment and the physical machining processes. A critical aspect of this gap is setup planning, which requires extensive experience and is typically performed manually. To improve the performance of CAD/CAM systems, the task of setup planning needs to be automated. This paper presents an automatic approach to setup planning for components machined on a lathe. The problem of setup planning is formulated as a mathematical problem. Issues taken into consideration include geometry analysis, precedence constraint analysis, kinematic analysis, force analysis, and tolerance analysis. An algorithm is then presented to solve the setup planning problem. An example is also given to show the effectiveness of the algorithm. The mathematical formulation of the setup planning problem is theoretically sound, and the algorithm can deal with a variety of turned components with promising results.