Machining of composite materials is an area still full of open questions, such as chip formation and assessment of machinability, compared to metal cutting. Due to the peculiar nature of composite materials, sound analysis lacks progress yet. A study of drilling of reinforced thermoset and thermoplastics for characterizing their responses to machining is presented. The attained results are discussed in comparison with the theories of metal cutting. First of all, the chip characteristics are observed and found to reveal various cutting mechanisms of these two materials. One tends to fracture and the other demonstrates a considerable amount of plastic deformation. The further calculation of the specific cutting energy, with the acquired knowledge of deformation behavior in chip formation, provides information of the effort and size effect in machining of composite materials. Thermoset-based material requires a larger cutting force due to higher strength and is more responsive to chip size because of the sensitivity to micro defects in fracturing chips. The results are useful in establishing a mathematical model to predict torque and thrust in drilling of composite materials as a function of cutting parameters and material strength. The effects of fundamental cutting conditions on cutting force as well as on surface integrity of hole entrance, exit and walls are also investigated. Based on the above discussions, some aspects of chip characteristics and machinability of these materials are revealed.