<p>The mechanism of chip formation plays a crucial role in the determination of cutting stability and the machinability of a material. Currently, the predominant emphasis of studies in the field of chip formation mechanism lies in conventional machining, with very less attention given to investigations pertaining to the influence of internal cooling conditions. This study aims to explore the serrated chip formation process of internal cooling machining known as submerged convective cooling (SCC) in the turning process using cutting simulation techniques. The research focuses on the use of AZ31 magnesium alloy as the subject of investigation. This study investigates the effects of varying cutting speeds and different cutting conditions (dry and SCC) on chip serration during turning. Subsequently, the simulation modelling technique was used to determine and analyse the relation between temperature and strain rate throughout the process of chip formation. The modelling of the serrated chip formation under SCC conditions and dry cutting was ultimately conducted. Results demonstrated that chip segmentation ratio increases with the increase of cutting speed in both SCC and dry conditions. The extent of chip serration exhibits an upward trend when subjected to SCC condition, which is attributed to the strain hardening of AZ31 magnesium alloy in SCC and the dominant thermal softening of dry cutting. Combination of strain rate and temperature affects the chip segmentation ratio. SCC has a lower adiabatic shear banding temperature for all cutting speeds; hence, it has a greater chip segmentation ratio than dry cutting.</p>