The in-situ TiB2/7050Al composites is a new kind of particle reinforced metal matrix composites (PRMMCs) with superior properties such as low density, improved strength and increased wear resistance. At present, the study of PRMMCs is focused on the ex-situ SiCp/Al composites, which has been researched from material preparation process to machinability. To the new kind in-situ TiB2/7050Al MMCs, few papers have been published on the cutting performance and finite element method (FEM) simulation. This work involves study on the chip formation and FEM simulation in cutting in-situ TiB2/7050Al MMCs. The orthogonal cutting experiments were carried out in our study. The chip geometric shapes, cutting forces and shear angle were investigated. Meanwhile, the cutting simulation model was established by applying Abaqus-Explicit method to have a deep insight of the chip formation process and mechanisms. The results show that the saw-tooth chips were common found under either low or high cutting speed and small or large feed rate. The mechanisms of chip formation included plastic deformation, adiabatic shear, shear slip and crack extension.