Advanced high-strength steels, particularly dual-phase (DP) steels like DP1000, are widely used in the automotive industry due to their exceptional strength and ductility. However, DP steels are sensitive to edge cracking caused by damage and edge surface roughness from conventional cutting processes such as punching. Laser-polishing has emerged as a technique to enhance edge quality by melting and reshaping the material, potentially improving formability. This study aims to investigate the enhanced formability of DP1000 steel achieved through laser-polishing using a multi-scale simulation approach. Hole expansion tests were conducted on DP1000 steel samples with varying edge profiles: punched and laser-polished edges with different geometries. Surface roughness profiles were characterized using white-light confocal microscopy. The modified coupled Bai-Wierzbicki damage model is used in the numerical calculations. Considering the effect of surface roughness, a surface factor is applied in the proposed damage and fracture locus to characterize the material behavior more accurately. Multi-scale FE simulations combined macroscopic modeling of the hole expansion test and microscopic modeling that incorporated actual surface roughness profiles. The numerically predicted force–displacement curves and hole expansion ratios for punched and laser-polished specimens align well with the experimental results. The inclusion of the surface factor in the MBW model effectively captured the influence of surface roughness and microstructural transformations on the material's formability.