Although new generation carbon fibre reinforced thermoplastic (CFRTP) such as carbon fibre reinforced polyetherketoneketone (CF/PEKK) is a promising sustainable alternative to the conventional thermoset CFRP, there is a lack of literature regarding its machining performance. This is the first study unveiling the hole wall and chip temperature evolution during drilling of thermoplastic CF/PEKK composite and the resulting material damages have been studied in detail. Through comparative study with CF/epoxy, the disparate drilling performance of the two composites has been uncovered, and the results were found to be closely related to the materials’ thermal/mechanical properties. Specifically, CF/PEKK produces continuous chips due to its excellent ductility and thermal sensitivity, whereas CF/epoxy produces segmented chips due to its brittle nature. CF/PEKK generates up to 40 N (50.5%) higher thrust force, 87.6 ℃ (98.9%) higher hole wall temperature and 61.1 ℃ (48.8 %) higher chip temperature than that of CF/epoxy. This has been correlated to the longer tool-chip contact length of CF/PEKK and its unique chip morphology. Despite the greater thrust force/temperature generation, CF/PEKK shows 55.7% lower delamination damage than CF/epoxy, and this is owning to its excellent interlaminar toughness. This study establishes a more in-depth understanding into the drilling performance of thermoplastic CF/PEKK and thermoset CF/epoxy and also provides guidance on the high performance manufacturing of next generation CFRPs.