Carbon-fibre-reinforced plastic (CFRP) is increasingly being used in various applications including aerospace, automotive, wind energy, sports, and robotics, which makes the precision modelling of its machining operations a critical research area. However, the classic finite element modelling (FEM) approach has limitations in capturing the complexity of machining, particularly with regard to the interaction between the fibre–matrix interface and the cutting edge. To overcome this limitation, a hybrid approach that integrates smoothed particle hydrodynamics (SPHs) with FEM was developed and tested in this study. The hybrid FEM-SPH approach was compared with the classic FEM approach and validated with experimental measurements that took into account the cutting tool’s round edge. The results showed that the hybrid FEM-SPH approach outperformed the classic FEM approach in predicting the thrust force and bounce back of CFRP machining due to the integrated cohesive model and the element conversion after failure in the developed approach. The accurate representation of the fibre–matrix interface in the FEM-SPH approach resulted in predicting precise chip formation in terms of direction and morphology. Nonetheless, the computing time of the FEM-SPH approach is higher than the classic FEM. The developed hybrid FEM-SPH model is promising for improving the accuracy of simulation in machining processes, combining the benefits of both techniques.