Stainless steels are widely utilized across various industrial sectors due to their outstanding corrosion resistance, high mechanical durability, and structural reliability. During metal cutting, chip formation mechanics directly dictate machining efficiency, surface integrity, and operational stability, making chip control a critical subject in contemporary manufacturing research. This study investigates chip morphology and primary deformation zone parameters, namely the chip thickness coefficient (Kh), shear angle (Φ), and tool–chip friction coefficient (μ), during finish turning of hardened X4CrNiMo16-5-1 stainless steel under dry and eco-friendly near-dry cooling conditions (MQL and MQCL). Chip forms and contact surfaces were characterized using scanning electron microscopy (SEM), While Φ and μ were calculated using the Lee and Shaffer slip-line field model across various cutting speeds (vc) and feed rates (f). SEM observations revealed serrated chip formation driven by periodic adiabatic shear localization in the primary shear zone. High interface temperatures (reaching ~900°C) triggered thermal softening of the cobalt binder phase in the cemented carbide inserts, producing localized surface plasticization and abrasion marks. MQCL effectively mitigated these extreme thermal loads, significantly suppressing binder softening compared to dry turning. Overall, eco-friendly conditions enhanced deformation zone mechanics, reducing Kh (by up to ~15.6% under MQL and ~14.1% under MQCL) and μ (by up to ~14.7% and ~13.1%), while increasing Φ (by up to ~18.7% and ~16.5%). Favorable machining conditions, simultaneously minimizing Kh and μ while maximizing Φ, were achieved at vc = 100–125 m/min and f = 0.005–0.1 mm/rev for dry turning, vc = 150–225 m/min and f = 0.1–0.175 mm/rev for MQL, and vc = 150–175 m/min across low (0.005–0.05 mm/rev) and high (0.2–0.25 mm/rev) feed rates for MQCL. Ultimately, a tailored selection of cutting parameters combined with eco-friendly cooling methods enables precise control over chip morphology and tribological behavior, significantly enhancing process stability and machining efficiency.