<p>The evolution of material microstructure induced by machining processes significantly influence the mechanical-thermal properties and the distribution of residual stresses of material, thereby profoundly affect their dimensional accuracy and service life. However, rather few reports of residual stress prediction have taken into account material microstructure evolution. This paper reviews and discusses the current state-of-the-art developments of residual stress calculation viewed from macro- and microscale perspective. From macroscale, a comprehensive comparison is conducted among predictive approaches for mechanical-thermal loading induced residual stress prediction, including empirical models, finite element method (FEM), physics-based analytical methods, artificial intelligence (AI), and hybrid strategies. Further, this study explores the underlying mechanisms of microstructure evolution induced by machining techniques, encompassing grain refinement, phase transformation, crystallographic orientation (CO) evolution, and dislocation density evolution. Meanwhile, the mechanism of microstructure evolution associated with material removal behaviors are analyzed, which include the effects of microstructure on material properties, cutting force, and temperature. The mechanism of mechanical loading-thermal loading-microstructure evolution iterative cycle are analyzed. Finally, the mechanism of microstructure evolution-induced residual stress has been thoroughly investigated and discussed. This review offers a timely analysis of literatures on residual stresses induced by machining processes, integrating insights from microstructure evolution to enhance the accuracy of residual stress prediction. This comprehensive approaches facilitate the machining of high-quality components by optimizing cutting parameters and employing simulation models.</p>