A hand-held oscillating spindle sander is disclosed. The sander includes a pair of toothed pulleys associated with the output shaft. The first pulley is attached to the output shaft for rotation with the output shaft. The second pulley is rotatably disposed on the output shaft for relative rotation with respect to the output shaft. The first and second pulleys have a different number of teeth. The second pulley includes opposed camming surfaces formed on the inside thereof. A cam follower is attached to and extends from the output shaft so that it is positioned between the opposed camming surfaces. A pair of toothed belts are respectively entrained around the first and second pulleys from a jackshaft rotatably received in the housing. Upon rotation of the toothed belts, both pulleys rotate, but at slightly different speeds. This slight difference in speeds causes the cam follower to move along the opposed camming surfaces to create an oscillation effect for the output shaft. A dust recovery system is associated with the base of the tool proximate to where the sanding tools engages the workpiece.