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Precision bar cutting process is a typical large localized plastic deformation process. Based on its forming characteristics, a numerical model is established and an elasto-plastic simulation is performed using the finite element method (FEM). The re-meshing method is used when the severe element distortion occurs to facilitate further computation and avoid divergence. The Normalized Cockroft & Latham fracture criterion is adopted to predict and determine the time and site of crack initiation and propagation. Based on this numerical model, the distribution and developing trend of the stress and strain in the shearing zone are predicted. Furthermore, the influence of several process parameters, such as cutting-speed, cutting temperature, cutting gap etc, on the cutting quality is analyzed. The discipline is in accordance with the actual manufacture situation, which can be guidance to optimization of process parameters.