An improved tool and method for enhancing the surface of a heat transfer tube are provided. The tool, which can be easily added to existing manufacturing equipment, includes cutting bits that may be retracted with a housing. The cutting bits include a cutting edge to cut through the surface of a tube and a lifting edge to lift the surface of the tube to form protrusions. A method for enhancing the inner surface of the tube includes mounting a tool on a shaft, positioning the tool in the tube and causing relative rotation and axial movement between the tube and the tool to cut at least partially through at least one ridge formed along the surface of the tube to form ridge layers and lift the ridge layers to form protrusions.