Modulation-assisted machining (MAM), which superimposes a controlled tool modulation in the feed direction of conventional machining (CM) process, can generate discrete chip formation and break the severe contact condition at the tool-chip interface. The previous literatures have shown MAM effectively reduces tool wear due to its discrete regime. However, the sources of such improvement are not well developed. This paper is dedicated to reveal the nature of MAM from the perspective of mechanical and thermal modeling. Chip formation of MAM is studied in both cylindrical turning and face turning configurations, showing that variable cutting thickness, rake angle, and flank angle are the intrinsic characteristics of MAM. Based on the chip formation analysis, an analytical force model is developed to determine the dynamic cutting force in MAM, incorporating material properties, tool geometry, cutting conditions (i.e., cutting velocity, feed rate, and depth of cut), and modulation conditions. The proposed force model is verified by orthogonal cutting experiments. Then, a thermal model is proposed to investigate the temperature variation in MAM and the effects of modulation conditions on temperature as well. The thermal model is validated by both finite element simulations and turning experiments. This paper can serve as a theoretical basis for further investigations on tool wear and surface integrity.