An analytical model for residual stress prediction considering the effects of material dynamic recrystallization under process-induced mechanical and thermal stresses is proposed. The effect of microstructure evolution on residual stress generation during the turning process is considered. The Johnson–Mehl–Avrami–Kolmogorov model is used to calculate grain size evolution due to thermal mechanical effects in the machining process. A modified Johnson–Cook flow stress model is developed by introducing a material grain growth–induced softening term. The classic Oxley’s cutting mechanics theories are implemented for machining forces calculation. A hybrid algorithm accounting for thermal, mechanical, and microstructure evolution effects is used to predict the residual stress profile on a machined workpiece surface. The proposed method is implemented for the orthogonal turning of Ti-6Al-4V material. Comparison is conducted between the model prediction and the literature measurement residual stress data. The general trend of the machining-induced residual stress on the machining surface is accurately captured by the proposed model. Also, the parametric study is conducted to investigate the effect of rake angle and depth of cut on the residual stress profile.