In this paper, the finite element model of drilling CFRP/TC4 stack structure was established to explore the material removal process, two-phase material and interface damage formation mechanism under different stacking sequences of CFRP/TC4 stack structure. The correctness of the model was verified by thrust force and defect type obtained from CFRP/TC4 stack drilling experiment. The results show that when the drilling sequence is CFRP→TC4, the entrance delamination dominated by tear occurs at the entrance of CFRP. There is no obvious push out delamination at the CFRP exit, but the interface delamination is formed under the continuous rotation of the drill. When the drilling sequence is TC4→CFRP, if the thickness of titanium alloy to be cut is low and the thrust force exceeds the interfacial bonding strength between CFRP layers, the interfacial phase failure occurs. The interface damage of TC4→CFRP is more serious than that of CFRP→TC4. TC4→CFRP mainly forms push out delamination with open and sliding crack propagation.