With increasing environmental concerns, the substitution of mineral oil-based cutting fluid has become an urgent issue. Using vegetable soybean oil as base fluid, nanofluid cutting fluids (NFCFs) were prepared by adding different weight concentrations of nanographite particles (NGPs), and their penetration and lubrication performances were studied. A novel simulated tool-chip slit with micrometer-sized geometry was manufactured to evaluate and quantify the penetration rate of the NFCFs by image analysis approach. Moreover, a large number of comparative experiments on the closed-type broaching machine were carried out to compare the performance of the proposed NFCFs and a commercial cutting fluid in terms of cutting force, workpiece surface roughness, and metal chip. It is found that there is an optimal NGP concentration in NFCF for practical cutting applications. When the concentration of NGP is 0.4 wt%, the broaching process lubrication exhibits an ideal mixed lubricate state, resulting in minimal friction resistance, and thus, both the cutting force and chip curling angle reach their corresponding best values. Moreover, the proposed NGP-based vegetable-oil cutting fluid exhibits excellent environment-friendliness and low-cost consumption in the minimal quantity lubrication (MQL) method; this demonstrates its potential for replacing the traditional broaching cutting fluid.