Machining hardened steels is always difficult because of its excessive heat generation. That is why, the application of cutting fluid in machining hardened steel is noted for eliminating defects triggered by the high cutting temperature. In this respect, the aim of this paper is to present a stable high volume carbon nanotube based nanofluid which will act as an efficient cutting fluid and perform better than conventional cutting fluid. To fulfill this purpose, the samples with different volumes of Carbon nanotubes were made and their stability was analyzed. Both the sedimentation and zeta potential analysis proved that the sample made with less than 0.4% volume CNTs shows higher stability. Conventional cutting fluid was made with oil mixed in water and compared its properties to all nano fluid samples. All the nano fluid samples showed higher thermal conductivity and lower viscosity than conventional cutting fluid. Furthermore, a milling operation on 42CrMo4 hardened steel material was performed without any fluid, with conventional (Aquatex 3180 oil based cutting fluid) and with nano fluid. Nano fluid was delivered internally to the cutting zone by using a specially designed liquid applicator. Maximum 29% reduction in cutting temperature, 34% reduction in surface roughness, 33% reduction in cutting force and 39% reduction in tool wear was obtained by using the 0.3 vol% nanofluid sample. So, it can be concluded that the 0.3% volume carbon nanotubes based cutting fluid is an appropriate choice to be used in machining hardened materials.