Machining of polycrystalline metal materials results in metallurgical modifications in the machined surface, and it can introduce multiscale residual stresses (macroscale and microscale residual stress), which may be detrimental to the mechanical properties thereby interfering with the service performance of machined parts. However, most of the current studies only focus on the macroscale residual stress, the microscale residual stresses have always been neglected since the limitations of the commonly used techniques for residual stress measurement in machined surfaces. In this study, the recently developed Focused Ion Beam-digital image correlation (FIB-DIC) ring core method was employed to evaluate the time-resolved strain relaxation and multiscale residual stress of the machined surface under different cutting conditions. The quantitative evaluation of residual stress and microstructural effects on hardness of the machined surface was conducted by combining with FIB incremental milling and nanoindentation technique. It has been observed that although the global tensile strain relaxation was captured in the ring-core region, local microscale compressive strain relaxation also occurred. The hardness of the machined surface was determined by the combined effects of microstructure and residual stress induced by machining. Specifically, the grain refinement and compressive residual stress contributed to hardening, while tensile residual stress resulted in softening of the machined surface. Furthermore, it was also observed the hardening/softening effects were enhanced with increasing intensity of tension and compression.