Chip types in machining are determined by the combined effects of workpiece material properties, cutting speed, and tool geometry. The understanding of chip formation plays an important role in machining process optimization and surface integrity. Discontinuous chips, one of the major chip types, are usually formed in hard machining at high speeds. In this study, a new method has been presented to simulate discontinuous chips in high-speed machining AISI 4340 (32 HRc). The workpiece material properties have been modeled using the Johnson–Cook (JC) plasticity model, and material crack formation and propagation simulated using the Johnson–Cook damage model. It has been shown that discontinuous chip is due to the internal crack initiation and propagation in front of the tool and above the cutting edge, rather than from the free surface. The simulated chip morphology correlated well with the experimental results.