A vibration-reduced impact tool is disclosed wherein an elastomeric vibration isolator is fixedly attached within the tool housing and functions to absorb the vibration typically transmitted from the handle to the operator. The isolator is mounted between the cylinder assembly and the handle. As the tool is operated, a piston within the cylinder assembly is driven forward where it impacts with a tool accessory. The impact causes the piston and cylinder assembly to slide rearward in the tool housing, toward the handle. The elastomeric isolator absorbs the rearward movement of the cylinder assembly and thereby eliminates much of the vibration normally transmitted from the cylinder assembly to the handle and in turn, to the operator.