A system and method for repairing an area of defective tissue reduces the removal of healthy tissue at the margins of the defect. During excision of diseased or damaged tissue, the system tracks the movement and function of a tissue resection tool within a monitored surgical space. This movement is continuously recorded to create a three-dimensional set of data points representative of the excised volume of tissue. This data set is then communicated to a custom implant forming device which creates a custom implant sized to fit the void created by the excision. The system and method of the present disclosure allows a surgeon to exercise intraoperative control over the specific shape, volume and geometry of the excised area. Moreover, the surgeon may utilize a “freehand” resection method to excise only that tissue deemed to be diseased and/or damaged, because the custom-formed implant will accommodate an irregularly-shaped resection volume.