A two-dimensional coupled thermo-mechanical model is used to simulate the progress of milling mild carbon steel with continuous chip formation. Deformation of the workpiece is treated as elastic-plastic with isotropic strain-hardening. An analysis of the properties of temperature-dependent materials is employed. The chip separation is achieved by the adaptive remeshing strategy module found in commercial finite element code Marc.In order to increase the computational efficiency and accuracy, we implement a customized subroutine into the Marc code to define local refinement at the tool tip. Measurements are taken of the shape of the chip, the temperature, stress, strain and strain-rate fields. The values of the cutting forces obtained from the simulatious agree well with those obtained from the cutting experiments.