Particulate-reinforced metal matrix composites (PRMMCs) are difficult to machine due to the inclusion of hard, brittle reinforcing particles. Existing experimental investigations rarely reveal the complex material removal mechanisms (MRMs) involved in the machining of PRMMCs. This paper develops a three-dimensional (3D) microstructure-based model for investigating the MRM and surface integrity of machined PRMMCs. To accurately mimic the actual microstructure of a PRMMC, polyhedrons were randomly distributed inside the matrix to represent irregular SiC particles. Particle fracture and matrix deformation and failure were taken into account. For the model’s capability comparison, a two-dimensional (2D) analysis was also conducted. Relevant cutting experiments showed that the established 3D model accurately predicted the material removal, chip morphology, machined surface finish, and cutting forces. It was found that the matrix-particle-tool interactions led to particle fractures, mainly in the primary shear and secondary deformation zones along the cutting path and beneath the machined surface. Particle fracture and dilodegment greatly influences the quality of a machined surface. It was also found that although a 2D model can reflect certain material removal features, its ability to predict microstructural variation is limited.