Energy management is crucial to the cutting process where generation and conversion of various forms of energy is occurring. Reducing the energy that stored in the machined surface layer can significantly improve the quality of processing and dimensional stability of machined structures. To achieve this, an accurate energy conversion model is required. In the present study, energy generation and conversion process during peripheral milling titanium alloy Ti–6Al–4V are investigated. Analytical model of cutting energy that acted on the machined surface is first established. And then, energy criteria for machining-induced residual stress field are proposed, and the energy that stored in the machined surface layer is calculated on the basis of the measured residual stress. Finally, a Q-factor is proposed to relate cutting energy to workpiece internal energy. By experimental analysis, there is about 10.86% of the energy that acted on the machined surface converted to the workpiece internal energy. On the basis of the proposed energy conversion model, the influences of milling processing parameters on the machining-induced material internal energy are revealed. According to the research results, the increase in cutting speed, feed rate and radial depth of cut increase the machining-induced material internal energy, and it is the cutting speed and feed per tooth that turn out to be the chief reasons for energy conversion in peripheral milling.