To study the microstructure of white band is helpful for revealing formation mechanism of serrated chip. This paper investigates the microstructural characteristics of white bands at primary and second deformation zone within the serrated chips produced during High Speed Machining (HSM) of AISI 1045 hardened steel usingoptical microscope, SEM, TEM, and electron microprobe, X-Ray diffraction. It was found that the white bands within primary and second deformation zone consist of small equiaxed grains which formed due to dynamic recrystallization during adiabatic shear, however, martensitic transformation just only taken place within the white band in second deformation zone. The re-distribution of chemical elements between the composition phases occurred due to the combined effect of adiabatic temperature rise and high speed deformation in formation process of white band. The former is result from adiabatic shear in primary deformation zone during formation of chip, while the latter is caused by the intense shear and friction between tool and chip.