Laser-assisted mechanical micromachining offers the ability to machine difficult-to-cut materials, like superalloys and ceramics, more efficiently and economically by laser-induced localized thermal softening prior to cutting. Laser-assisted mechanical micromachining is a micromachining process with localized laser heating which could affect the cutting forces and the machined surface integrity. The residual stresses obtained in the laser-assisted mechanical micromachining process depend on both mechanical loading and the laser heating. This article focuses on the experimental process characterization and prediction of the cutting forces and the residual stresses in a laser-assisted mechanical micromachining–based orthogonal machining of Inconel 625. The results show that the laser assistance reduces the mean cutting forces by ~25% and enhances the normal compressive residual stress at the surface by ~50%. Since microscale residual stress measurement is very time-intensive, a coupled-field thermo-mechanical finite element model of laser-assisted mechanical micromachining has been developed to predict the temperature, cutting forces and the residual stresses. The cutting forces and residual stresses’ predictions are in good agreement with the measured values during machining. In addition, parametric simulations have been carried out for laser power, cutting speed, cutting edge radius, rake angle, laser location and laser beam diameter to study their effect on cutting forces and surface residual stresses.