This paper presents a study on the metal cutting simulation with a particular numerical technique, the Particle Finite Element Method (PFEM) with a new modified time integration algorithm and incorporating a contact algorithm capability . The goal is to reproduce the formation of continuous chip in orthogonal machining. The paper tells how metal cutting processes can be modelled with the PFEM and which new tools have been developed to provide the proper capabilities for a successful modelling. The developed method allows for the treatment of large deformations and heat conduction, workpiece-tool contact including friction effects as well as the full thermo-mechanical coupling for contact. The difficulties associated with the distortion of the mesh in areas with high deformation are solved introducing new improvements in the continuous Delaunay triangulation of the particles. The employment of adaptative insertion and removal of particles at every new updated configuration improves the mesh quality allowing for resolution of finer-scale features of the solution. The performance of the method is studied with a set of different two-dimensional tests of orthogonal machining. The examples consider, from the most simple case to the most complex case, different assumptions for the cutting conditions and different material properties. The results have been compared with experimental tests showing a good competitiveness of the PFEM in comparison with other available simulation tools.