In this study, a mesoscale dislocation simulation method was developed to study the orthogonal cutting of titanium alloy. The evolution of surface grain structure and its effects on the surface mechanical properties were studied by using two-dimensional climb assisted dislocation dynamics technology. The motions of edge dislocations such as dislocation nucleation, junction, interaction with obstacles, and grain boundaries, and annihilation were tracked. The results indicated that the machined surface has a microstructure composed of refined grains. The fine-grains bring appreciable scale effect and a mass of dislocations are piled up in the grain boundaries and persistent slip bands. In particular, dislocation climb can induce a perfect softening effect, but this effect is significantly weakened when grain size is less than 1.65 μm. In addition, a Hall–Petch type relation was predicted according to the arrangement of grain, the range of grain sizes and the distribution of dislocations.