Chip formation and surface generation were investigated when ultra-precision turning of SiCp/2009Al and SiCp/ZL101A composites using Single Crystal Diamond (SCD) and Polycrystalline Diamond (PCD) tools. The results showed that the machined surfaces took on many defects of pits, voids, microcracks, grooves, protuberance, matrix tearing etc. It was noticed that most of these defects had an intimate relationship with the removal process of SiC particle. The surface finish was much better when the SiC particles were removed by cut through or in-situ pressed into mechanisms. Material swelling and side flow, tool-workpiece relative vibration, feed rate and tool nose radius, removal mode of SiC particles were these main mechanisms of surface generation. Generally, a saw-toothed chip was formed when ultra-precision turning this kind of material and the mechanisms of this type of chip were dynamic microcrack behavior and strain concentration, which induced by the non-uniform deformation of the workpiece material.