In order to control tip leakage flow and improve the tip aerothermal performance, a circumferential casing groove (CG) configuration is proposed. Taking the typical transonic turbine stage TTM (Thermal Turbomachinery and Machine Dynamics) as the research object, the effects of CG with different heights (b), initial locations (IL) and widths (w) on the aerodynamic loss of the turbine stage and heat transfer characteristics of the tip region are investigated numerically. Results indicate that due to the introduction of CG, the vortex system topology in the tip region changes remarkably. Tip leakage vortex (TLV) is separated into two parts, with TLV-1 being entrained and dissipated by upper passage vortex (UPV) and TLV-2 rebuilding behind the groove and extending to the trailing edge. The interaction between TLV and UPV changes with the development of both. Also, complicated flow-thermal interplays lead to the change of thermal load in the tip region, which attributes to the difference of local turbulence mixing intensity. More quantitatively, a CG with the groove of b = 3.0 g, IL = 0.20 Cax and w = 0.05 Cax can increase ηTS by 0.38%, and reduce the area-averaged heat transfer coefficient (HTC) by 5.28% and 1.49% for the tip and casing surface, respectively, with a slight increase of area-averaged HTC on the blade by 0.29%. Overall, CG with appropriate geometrical parameters can improve aerothermal performance of the turbine tip significantly, without any serious increase of thermal load on the blade.