Compliance with environmental regulations is becoming more and more costly for manufacturers as government scrutiny and global trade agreements become more stringent. Metalcutting fluid use and disposal is a major concern as these environmental issues become more prominent. A new method for cooling and lubricating machining processes using very small amounts of a vegetable oil based fluid transported by air stream is currently being developed. This new method will allow a dramatic reduction in hazardous waste management costs for machine shops. Shops employing this new method will greatly reduce, and in some cases nearly eliminate the hazardous waste management costs associated with the use of cutting fluids in machining. This paper deals with the development and performance analysis of the new application system. In this system a high subsonic air stream carries the cutting fluid directly to the cutting zone. A discussion of the development, heat transfer, and lubricating characteristics of the system is provided. The performance of the system is then evaluated using metalcutting tests. Results obtained using the new cooling/lubricating system are markedly superior to those obtained with dry cutting. These results are at approximately the same levels as those obtained using traditional flood type coolants/lubricants, but at much lower cost.