In manufacturing industry, variations in machinability are regularly observed when producing the same part out of different material batches of a case hardening steel. Some batches result in variations in chip breakability which leads to a non-robust production process with unforeseen stops of automatic machining process. The aim of the present study is to investigate the influence of the microstructure on chip formation in case hardening steel. Different microstructures were produced from the same batch of material by varying heat treatment. Chips were collected after machining at different feed rates and depths of cut. The cross sections of the chips have been analyzed with respect to overall deformation pattern, mean thickness, and degree of segmentation. Also, the influence of manganese sulfide on machinability has been investigated. The microstructural investigation of the chips has shown that there is a clear difference in the deformation behavior between a case hardening steel with larger and smaller pearlite nodular structure. Chips from the material with larger pearlite nodular size and lower amount of pro-eutectoid ferrite are by far more segmented as compared to chips from materials with smaller pearlite nodular size.