Intramedullary nailing is a routine orthopedic procedure used for treating fractures of femoral or tibial shafts. A critical part of this procedure involves the drilling of pilot holes in both ends of the bone for the placement of the screws that will secure the IM rod to sections of the fractured bone. This step introduces a risk of soft tissue damage because the drill bit, if not stopped in time, can transverse the bone-tissue boundary into the overlying muscle, causing unnecessary injury and prolonging healing time due to periosteum damage. In this respect, detecting the bone-tissue boundary before break-through can reduce the risks and complications associated with intramedullary nailing. Hence, in the present study, a two-wavelength diffuse reflectance spectroscopy technique was integrated into a surgical drill to optically detect bone-tissue boundary and automatically trigger the drill to stop. Furthermore, Monte-Carlo simulations were used to estimate the maximum distance from within the bone at which the bone-tissue boundary could be detected using DRS. The simulation results estimated that the detection distance, termed the "look-ahead-distance" was ∼1.5 mm for 1.3 mm source-detector fiber separation. Experimental measurements with 1.3 mm source-detector fiber separation showed that the look-ahead-distance was in the order of 250 µm in experiments with set drill rate and in the range of 1 mm in experiments where the holes were drilled by hand. Despite this difference, the automated DRS enhanced drill successfully detected the approaching bone tissue boundary when tested on samples of bovine femur and muscle tissue.