The performance and lifespan of safety-critical components, such as turbine discs made from Inconel 718, are significantly influenced by residual stresses and surface microstructural characteristics resulting from thermomechanical effects during machining. Elevated temperatures generated in the cutting zone play a critical role, with most heat being removed by chips, while some residual heat transfers to the workpiece and tool. This thermal effect not only accelerates tool wear but also promotes undesirable tensile residual stresses, adversely affecting fatigue strength and overall mechanical performance. Optimizing machining processes through improved tool design can significantly mitigate tensile residual stresses, enhancing fatigue life. This study investigates the effect of cutting tool edge geometry on residual stress and microstructural changes during the turning of Inconel 718. Various tool geometries were analyzed to determine their specific influences on thermomechanical loads in the cutting zone. Additionally, a chip formation simulation validated by experimental data was developed to provide deeper insights into the underlying physical mechanisms. The findings enhance the understanding of how cutting tool geometry affects surface integrity and form a foundation for future function-oriented tool design strategies.