Difficult-to-machine materials such as stainless steel are widely used in the construction industry, because of their excellent mechanical properties and corrosion resistance. However, the poor tool-chip contact environment, severe tool wear, and heavy chip accumulation inhibit the machining efficiency. In this paper, 316L austenitic stainless steel was selected to investigate the effect of a variable-length restricted contact tool (VL-RCT), aiming at reducing the cutting temperature and increasing the tool life. A finite element simulation model of restricted contact cutting was established to investigate the machining parameters and restricted contact parameters on cutting performances and to clarify the mechanism of the VL-RCT in the cutting process. Additionally, cutting experiments were conducted to verify the cutting process mechanism. The results showed that the variable restricted contact structure efficiently reduced the cutting force and cutting temperature and improved the cutting performances of austenitic stainless steel. Both numerical simulation and cutting experiments reported that the trapezoidal restricted contact structure improved the cutting performance the best. Accordingly, this research provided theoretical guidance for the optimization of tool structure and the selection of cutting parameters, as well as a solid foundation for the future development of relevant design theories and methods for high-performance tools.