White layers, produced by machining cylinders of AISI 52100, AISI 4340, and AISI M2 steels, are characterized using nano-indentation hardness tests, and microstructural analysis through optical microscopy, transmission electron microscopy and X-ray diffraction. Microstructural observations show that the white layer is composed primarily of martensite. The martensite structure in the white layer is found to have a mean hardness of 12.6 GPa, which is significantly greater than the hardness values of martensite produced by heat treatment or ausforming processes. Furthermore, its grain size is shown to be in the sub-micron range with values ranging, typically, between 50 nm and 500 nm. These two novel characteristics of the white layer martensite distinguish it from martensite structures formed in other operations. The formation of the white layer is promoted by conditions of high cutting speed (100 m/min to 200 m/min) and moderate to large values of tool flank wear. Based on these observations, it is hypothesized that white layer formation involves three steps, austenitization of the steel surface, followed by deformation of the high temperature austenite to large plastic strains, and finally, rapid quenching of the austenite by the bulk of the material to form a martensite structure.