Traditional models of regenerative machine tool chatter use constant time delays assuming that the period between two sub-sequent cuts is a constant determined definitely by the spindle speed. These models result in delay-differential equations with constant time delay. If the vibrations of the tool relative to the workpiece are also included in the surface regeneration model, then the resulted time delay is not constant, but it depends on the actual and a delayed position of the tool. In this case, the governing equation is a delay-differential equation with state dependent time delay. Equations with state dependent delays can not be linearized in the traditional sense, but there exists linear equations that can be associated to them. This way, the local behavior of the system with state dependent delays can be investigated. In this study, a two degree of freedom model is presented for milling process. A thorough modeling of the regeneration effect results in the governing delay-differential equation with state dependent time delay. It is shown through the linearization of the nonlinear equation that an additional term arises in the linearized equation of motion due to the state-dependency of the time delay.