Although chip breaker controls chip flow effectively, how chip breaker changes cutting process and reduces chip curl radius is unpredictable quantitatively. Thus the steady state cutting by tools with chip breaker is calculated by finite element method. Namely chip formation, cutting force, temperature and stress distributions on the tool rake face, and chip curl radius, and their changes with the shape of chip breaker are obtained. When chip breaker is effective, large shear angle, small cutting force, low cutting temperature and small chip curl radius are realized in calculation as will be expected. The predicted change of chip curl radius with the shape of chip breaker sufficiently agrees with experimental results. Then the above finite element approach to chip breaker is applied to the crater wear of P20 carbide tools with chip breaker. Since wear equation of P20 tool has been obtained as a function of temperature and normal stress on the tool rake face, rate of crater wear is readily calculated. Reduction of wear rate by chip breaker in calculation is in good agreement with that in experiment.