Using conventional grinding wheels, wheel-sided chatter vibration is one of the limiting factors in terms of productivity and surface finish. Initial vibration related to the dynamic behavior of the machine tool copy on the grinding wheel and its amplitude amplifies by abrasion. To ensure high workpiece quality many expensive truing cycles are needed. In this context, we suggest a new set-up for the automatic chatter detection and elimination for external cylindrical grinding machines, reducing not only the high amount of true running cycles, but also improving the efficiency. In order to suppress the generation of the waviness on the grinding wheel the effect has to be identified during an early stage of its development. Therefore, a grinding machine is equipped with different types of sensors, i.e., eddy current, force, acoustic emission, acceleration sensors, and a tactile probe. Experimental results show, that exclusively measuring the displacement at the workpiece is sufficient for online computing wheel's waviness. Based on a model of the grinding process the other redundant sensors are used for validation. In addition, a robust online chatter detector based on the wavelet transformation is developed recognizing an instable grinding process. This model-based detection and estimation of waviness delivers solid results, it should be used for suppression of chatter in further work.