Experimental studies have shown that improved metal cutting efficiency can be obtained when a high-pressure water/coolant jet is injected at the tool-chip interface. The pressure exerted on the chip face by the jet is expected to reduce, for example, friction along the tool-chip interface, temperature rise in the chip and the workpiece, the cutting force, and residual stress in the finished workpiece, leading to a longer tool life and a better surface integrity for the finished workpiece. This paper presents the results of finite element simulations of high-pressure water-jet assisted orthogonal metal cutting, in which the water jet is injected directly into the tool-chip interface through a small hole on the rake face of the tool. The mechanical effect of the high-pressure water jet is approximated as a pressure loading at the tool-chip interface. The frictional interaction along the tool-chip interface is modeled by using a modified Coulomb friction law. Chip separation is modeled by a nodal release technique and is based on a critical stress criterion. The effect of temperature, strain rate and large strain is considered. Cooling effect of the high-pressure jet on the temperature distribution is modeled with a convective heat-transfer coefficient. The effect of water jet hole position and pressure is studied. Contour plots showing the distributions of steady-state temperature and stress and the residual stress are presented. The simulation results show a reduction in temperature, the cutting force and residual stresses for water-jet assisted cutting conditions. The mechanical effect of the water jet is found to reduce the contact pressure and shear stress along the tool-chip interface and also the contact zone length for certain water jet hole locations.