This paper investigated the wear mechanism of diamond during the atomic force microscope (AFM) tip-based nanomachining of Gallium Arsenide (GaAs) using molecular dynamics (MD) simulations. The elastic–plastic deformation at the apex of the diamond tip was observed during the simulations. Meanwhile, a transition of the diamond tip from its initial cubic diamond lattice structure sp3 hybridization to graphite lattice structure sp2 hybridization was revealed. Graphitization was, therefore, found to be the dominant wear mechanism of the diamond tip during the nanometric cutting of single crystal gallium arsenide for the first time. The various stress states, such as hydrostatic stress, shear stress, and von Mises stress within the diamond tip and the temperature distribution of the diamond tip were also estimated to find out the underlying mechanism of graphitization. The results showed that the cutting heat during nanomachining of GaAs would mainly lead to the graphitization of the diamond tip instead of the high shear stress-induced transformation of the diamond to graphite. The paper also proposed a new approach to quantify the graphitization conversion rate of the diamond tip. © 2020 Elsevier B.V.