Formation of chip is a typical severe plastic deformation progress in machining which is only single deformation stage. The large strain, low temperature and deformation force are the major premises to create significant microstructure refinement in metals and alloys. A finite element method was developed to characterize the distribution of strain, temperature and cutting force. Effects of rake angle, cutting velocity and friction on effective strain, cutting force imposed in the chip are researched and the conditions which lead to the large stain deformation in machining are highlighted. The results of simulation have shown that chip materials with ultrafine grained and high hardness can be produced with negative tool rake angle at some lower cutting velocity.