The nano-machining of monocrystalline silicon by AFM with the diamond tip as machining tool is realized. The characteristics of nano-machining surface, the material removal mechanism under different vertical loads and the features of swarf formation are systematically analyzed. A new method for studying the machining mechanism in nanometer scale is presented. And the reaction mechanism between diamond tip and machined material in AFM Nano-machining is computer-simulated by Finite Element Method.