Machining processes are one of the most important finishing operations in the fabrication of composites, which contain natural fibers. However, it is difficult to attain a better fishing on the final components. Hence, an attempt has been made in the work to achieve a good surface finish in compression-molded hybrid fiber composites containing nanoclay particles by optimizing the milling parameters. Experiments were conducted by using Box–Behnken design (response surface methodology (RSM)) to optimize the milling process parameters such as spindle speed (16, 24, and 32 rpm), feed rate (0.1, 0.2, and 0.3 mm/rev.), and depth of cut (1, 1.5, 2 mm) along with different vol% of nanoclay content (3%, 6%, and 9%). The surface roughness of machined fiber composite was measured, and the most influential parameters were analyzed by analysis of variance, evaluation of signal-to-noise ratio, and mathematical models of responses were developed by RSM. The experimental results (A2B1C4D3) indicated that the feed rate is one of the most significant parameters, followed by nanoclay content, depth of cut, and spindle speed. Surface roughness was found to decrease continuously (2.18–2.08 µm) with increasing nanoclay content (up to 6%) at a certain limit and further addition of clay content (above 6%); the results were declined (2.42 µm) for the same levels of other parameters.