A microstructure-level finite element machining model has been developed to simulate the machining of carbon nanotube (CNT) reinforced polymer composites. The model integrates a failure model with a previously developed microstructure-based material model. The competition between ductile and brittle modes of failure in the polymer phase (polycarbonate) is captured by implementing the Gearing and Anand failure model calibrated at different temperatures. The CNT phase is given a simple strain-to-failure criterion. The proposed machining model has been validated at different orthogonal machining conditions for the plain polycarbonate and for composites with two different percentage loadings of CNTs. On an average, the model is seen to successfully predict the cutting forces with an accuracy of 8% and the thrust forces with an accuracy of 13.4% for all the materials. The machining model also predicts the continuous chip morphology and formation of adiabatic shear bands in plain polycarbonate and for composites with lower loadings of CNTs. On an average, the chip thicknesses are predicted within an accuracy of 14% for plain polycarbonate and 10% for the CNT composites.