Drilling is a key factor in the manufacturing of holes required for the assemblies of composite laminates in aerospace industry. The quality of holes can be controlled by the choice of tool geometry and process parameters. Simulation of drilling process is an effective method in optimizing the drill geometry and process parameters in order to improve hole quality and reduce the drill wear. In this research, we have developed three-dimensional finite element model for drilling carbon fiber-reinforced. A three-dimensional progressive intra-laminar failure model based on the Hashin's theory is considered. Also, an inter-laminar delamination model which includes the onset and growth of delamination by using cohesive contact zone was developed. It is shown that the induced thrust force, torque, damaged area and delamination are predicted very well with the given drill geometry and process parameters. The delamination area resulted from drilling of carbon fiber-reinforced polymer was predicted successfully using the developed model. The current finite element model using three-dimensional elements and improved damage models showed much better capability in simulation of the drilling process of CFC compared to the previous model using shell elements.