A multiscale finite element model is developed to simulate the chip formation in laser-assisted machining of silicon nitride ceramics. To consider the workpiece heterogeneous microstructure and crack evolution in silicon nitride machining, the workpiece material is modeled with continuum elements imbedded in thin interfacial cohesive elements. The continuum elements simulate the deformation of the bulk workpiece while the interfacial cohesive elements account for the initiation and propagation of intergranular cracks. The model reveals that discontinuous chips form by the propagation of cracks in the shear zone while the machined surface is generated by plastic deformation of the workpiece material under confined high pressure. The simulated cutting forces, chip morphology and subsurface integrity are compared with corresponding experimental observations and the validity of the present model is shown by the good agreements in the comparisons.