An expansion and sensing tool (50) comprising a tool body, cutter blocks and sensors which permit simultaneous underreaming and measurement of the diameter of a wellbore (40) drilled by an oil and gas rig (10). Radially extendable cutter blocks (62) incorporating positional sensors (80) contained on the block or within the body measure the position of the cutter block relative to the tool, and a vibration sensor (76) measures vibration and underreaming wellbore dimensions in real-time. Receivers, sensors and microprocessors deliver a desired wellbore depth both simultaneously comparing and correlating measured vibration data and optimizing underreaming parameters. The tool may be optionally configured with a caliper or a stabilizer.