This paper discusses machine tool modelling, comprising the design process, degradation and repair processes and accurate identification, aimed at the effective improvement of machine tools. The importance of the holistic approach to modelling for the accurate identification of machine tool errors and the ways in which they arise and for their minimization, taking into account thermal and dynamic interactions, is highlighted. Models of the sources of errors (power losses) occurring in rotary direct drive motors and in rotary tilting table bearings are presented. Also the modelling of power losses in linear direct drive motors and in rolling guideways is described. Mostly original relations, supported by the results of studies on the modelling and computing of errors in the controlled axes of a 5-axes machining centre carried out by the authors, are used in the modelling.