Chip segmentation due to shear localization during machining of titanium alloys affects cutting forces and their machinability. Despite several studies on modeling and understanding influence of chip segmentation, little is known about the effect of preheating on it. This work therefore, involves orthogonal machining of Ti6Al4V alloy under preheating between 100 °C and 350 °C to investigate chip segmentation, shear band configuration, and microstructure of machined surfaces, through optical and scanning electron microscopy of chips and chip roots. Conceptual models of chip segment formation have been evolved. Shear band formation appears to be the dominant mechanism of chip segmentation up to 260 °C preheating, however at 350 °C, extent of fracture along the shear plane increases. The preheating increases spacing between shear bands in chips, reduces shear band thickness from 21 μm at 100 °C to 8 μm at 350 °C, and ultimately reduces cutting forces fluctuation, and compressive residual stresses in the machined surfaces.