The metallurgical observations of microstructure characteristics of the adiabatic shear bands(ASB) within the primary shear zones of the serrated chips produced during high speed machining high strength steel have been performed by using optical microscope, SEM and TEM. The observations showed that the microstructure between the matrix and the center of the ASB gradually was changed, the fine equiaxed grains appeared with size of about 0.4～0.6μm in the center of the adiabatic shear band. The serrated chip formation was likely due to material softening that occurred in the primary shear zones. The microstructural development of dynamic recovery and rotational dynamic recrystallization is the dominant metallurgical process leading to material softening in primary shear zone during high speed machining. A model of microstructural development in primary shear zone during serrated chip formation in high speed machining was suggested by analyzing material softening mechanism.