The characteristic mechanical (and physical) properties of compacted graphite iron (CGI) are contingent upon its unique microstructure. To model and simulate compacted graphite iron (CGI) in machining meaningfully, the metal's microstructure should not be overlooked throughout the process.In this work, modeling the microstructure of CGI in machining is implemented using a commercial general-purpose finite element package; ABAQUS/EXPLICIT (v 6.8). Segmental chip is modeled by the introduction of a new chip formation modeling technique. The cohesive zone elements are used to model the graphite–matrix interface. The methodology pursued to implement the finite element model is based upon an iterative interaction between comprehensive metallurgical investigations and finite element formulation of the problem in hand. Metallurgical examination of fractured and machined chips is not solely performed as a tool of validation, but rather as a tool of modeling.Vital model inputs are based upon metallurgical investigations of fractured CGI samples and machined chips. Subsequent comparisons between (1) simulated chips and (2) cutting forces trends, to experimental findings are used to validate the finite element model. The effects of cutting forces and temperature are comprehensively investigated to elaborate on their effects on tool wear. The effect of cutting speed (and feed rate) on cutting forces and cutting temperature determine the type of tool wear in CGI machining. Variation of the cutting speed triggers the deviation from mechanical to thermal tool wear mechanisms. This behavior is captured through the investigation of the cutting forces and simulated temperature trends in the finite element model. Other important findings are documented to serve as an optimization technique for tool material selection and machining conditions of compacted graphite iron (CGI) for which automotive and locomotive industries are of significant need to date.