Micro-milling is essential for manufacturing miniature precision components. The process involves free/restricted tool overhang length, runout, deflection, force and stability. In comparison to a macro-milling process, it is very difficult to determine the micro-milling force and stability in such a small machining scale due to higher spindle speeds, runout and deflection of the tool point. In this paper, we have proposed a complete and practical model for micro-milling process, which includes dynamic tool deflection and establishment of a stability lobe diagram (SLD) with runout-dependent effect. First, a multi-sections discretization method combined with dynamic tests was employed to the tool holder and tool dummy so that the frequency response function (FRF) at tool point was identified. Two runout models were introduced with the corresponding parameters, and the instantaneous uncut chip thickness (IUCT) was obtained by numerical solution. Then the dynamic tool deflection was developed by the product of force decomposition and FRF at tool point. Finally, the interaction between feed per tooth, runout and dynamic tool deflection was studied, which led to the proposed SLD. The experiments demonstrated that tool deflection as well as runout affected the IUCT, and runout enabled the cutter pitch angle acting on the workpiece to change, which enhanced stability limits despite reducing machining accuracy. In addition, the increase of feed per tooth also contributed to the improvement of stability boundary.