A finite element model is presented to simulate chip breaking when orthogonal turning medium carbon steel with a grooved cutting tool is used. The chip formation, chip breaking, cutting force, stress, strain and temperature are simulated by the thermo-elastic-plastic finite element method, using commercial finite element software. The cutting process is simulated from the initial to the steady-state of cutting force, and then to periodic fractures of machined chip, by incrementally advancing the cutting tool. Normalized Cockcroft & Latham's criterion is employed to predict the effect of tensile stress on chip fracture. The cutting force and bending moment are analysed to explain the mechanism of chip breaking. Experiments on the application of the grooved cutting tool were performed. The simulated broken chip profile and cutting force compare well with experimental observations that the established FE model is capable of capturing the overall trend of the experimental results.