Elastohydrodynamic lubrication (EHL) is an important branch of the lubrication theory, describing lubrication mechanisms in nonconformal contacts widely found in many mechanical components such as various gears, rolling bearings, cams and followers, metal-rolling tools, traction drives, and continuous variable transmissions. These components often transmit substantial power under heavy loading conditions. Also, the roughness of machined surfaces is usually of the same order of magnitude as, or greater than, the estimated average EHL film thickness. Consequently, most components operate in mixed lubrication regime with significant asperity contacts. Due to very high pressure concentrated in small areas, resulted from either heavy external loading or severe asperity contacts, or often a combination of both, subsurface stresses may exceed the material yield limit, causing considerable plastic deformation, which may not only permanently change the surface profiles and contact geometry but also alter material properties through work hardening as well. In the present study, a three-dimensional plasto-elastohydrodynamic lubrication (PEHL) model has been developed by taking into account plastic deformation and material work-hardening. The effects of surface/subsurface plastic deformation on lubricant film thickness, surface pressure distribution, and subsurface stress field have been investigated. This paper briefly describes the newly developed PEHL model and presents preliminary results and observed basic behavior of the PEHL in smooth-surface point contacts, in comparison with those from corresponding EHL solutions under the same conditions. The results indicate that plastic deformation may greatly affect contact and lubrication characteristics, resulting in significant reductions in lubricant film thickness, peak surface pressure and maximum subsurface stresses.