Virtual NC lathe machining simulation system is carried out with Visual C++ and Open Inventor software. The system possesses visible UI, interactive inputting workpiece and machining parameters, the integration of geometric simulation and physical simulation, all the simulation functions including real-time display machining process, tool moving, workpiece geometry shape change, the generation and movement of iron simulation, workpiece pressure shape change could be realized. Tool temperature analysis and stress & strain analysis are simulated in the cutting process by FEM. The simulation results show the high efficiency of the simulation algorithm, reasonable simulation results, lifelike. The practice and training could be replaced by the virtual one. The system is applied to verification of NC code, quality evaluation of machine operators, operators, CNC programming staff training and other functions.