A novel machining method based on the graphene nanoparticles dispersed in canola oil as the cutting fluid to provide lubrication/cooling effect for the processing area was proposed. The effects of the nanofluid on the chip adhesion layer of the cutter were determined. Compared with the dry cutting method, the thicknesses of chip adhesion layers on the flank face and rake face of cutter decrease by 38.8% and 28.8% with the canola oil+graphene nanofluid, respectively. In addition, the cutting force and workpiece surface roughness decrease by 51.4% and 50.1%, respectively. The relatively high thermal conductivity of graphene can reduce the temperature of the cutting zone. In addition, the graphene can penetrate the contact zone between the chip adhesion layer of cutter and the workpiece, which effectively protects the coating of cutting tool and decreases the chip adhering to the workpiece surface. Besides, the graphene can fill the pits on the workpiece surface, thus improving the cutter surface quality.