Thin film structures are becoming increasingly more important for industrial applications such as the making of solar panels, microelectronic devices and micro systems. However, the challenges encountered in the machining of thin film structures have been a bottleneck that impedes further wide spread uses of such structures. The development of material removal processes that are capable of producing a damage free surface at high removal rates is critical for cost effective production. Such development relies highly on a comprehensive understanding of the deformation, failure and removal mechanisms of thin film structures involved in mechanical loading. In this paper, the current understanding of the deformation characteristics of thin film systems was reviewed to provide important insights into the interfacial failure under mechanical loading, with focuses on the interfacial failure mechanisms and existing problems in the machining of thin film structures. The key characterization techniques were outlined. In particular, the recent progress in the abrasive machining of a thin film multilayer structure was summarized. The potential research directions were also presented in the end of the review.