Paul Bunyan's tool is an AXE, which is a three-letter word. An AXE is a tool used for chopping wood and other materials. It has a long handle with a sharp blade at the end. Paul Bunyan was a legendary lumberjack in American folklore who was said to have used an AXE to chop down trees. He is often depicted as a giant man with superhuman strength, so it is no surprise that he would use an AXE as his tool of choice.