To establish a functional surface through high-speed blanking (HSB) facilitated by the formation of adiabatic shear bands (ASB), it is essential to consider not only the impact of process parameters and homogenized material properties but also to comprehend the significance of the material’s microstructure on ASB initiation, ultimately resulting in grain fragmentation on the cut surface. In this study, a fully resolved polycrystalline microstructure model reconstructed based on microstructure characteristics like grain size, shape distribution and texture is coupled with thermo-mechanical crystal plasticity (CP) material model to systematically investigate the influence of each material property, microstructure characteristics and process parameters on ABS initiation. The use of crystal plasticity model allows for inclusion of evolution of local grain orientation and grain rotation. Here a 2.5D microstructure model is employed to minimize computational costs. The material model parameters are optimized through an extensive material characterization experimental program conducted at varying strain rates and temperatures. Given the dynamic nature of the high-speed blanking process, the thermo-mechanical CP model is implemented into the LS-Dyna explicit solver. The study also explores the impact of the dominant stress state, determined by the blanking clearance, using an idealized boundary condition. The resultant correlation between process parameters, microstructure, and ASB initiation yields valuable process maps for achieving a functional layer through HSB.