Magnetic needle grinding processing technology is one of the magnetic grinding processing techniques. It possesses the characteristics of micro-cutting removal, small increase in processing temperature, flexible processing, high-quality, and high-precision processing. It is mainly utilized to remove burrs at the edge of the workpiece and the edge of the hole, as well as to finish the surface of the workpiece. It is frequently employed in civil, aerospace, navigation, and other fields. Due to the randomness and complexity of magnetic needle movement in magnetic abrasive finishing, it is difficult to quantify the processing parameters and predict processing effects. Therefore, this paper establishes a simulation model of magnetic needle in magnetic abrasive finishing by the coupling numerical simulation method of fluid dynamics discrete element method (CFD-DEM) to analyze the working state parameters of the magnetic needle. Through the simulation of actual working conditions, the machining process and parameters of magnetic abrasive finishing are quantified and analyzed, and the motion trend of magnetic needles during the machining process is studied. Then, the residual stress of single magnetic needle impact is analyzed with ABAQUS, and the performance enhancement of the workpiece is predicted. Finally, observations of surface morphology and validation of residual stress prediction were conducted through experiments on an aluminum plate. The results show that the residual stress of the aluminum plate is positively correlated with the number of strikes of the magnetic needle. The residual stress changes from tensile stress (+0.1 MPa) to compressive stress (-16.5 MPa). The comparison between simulation results and experimental results is good, indicating that the simulation model can comprehensively consider multiple factors such as magnetic field, particle motion, and fluid flow, and establish a magnetic needle magnetic grinding process model that is suitable for actual working conditions.