Cutting fluids play a crucial role in machining processes by cooling the cutting tool and workpiece, reducing friction at the tool-workpiece interface, and facilitating chip removal from the cutting zone. The primary objective of cutting fluid application is to minimize heat generation and frictional wear, thereby enhancing tool life, improving surface finish, and ensuring process stability. The effectiveness of cutting fluids is highly dependent on machining conditions, fluid composition, and the method of application. However, the improper selection, use, and disposal of cutting fluids can lead to serious health risks for operators and significant environmental concerns, including soil and water contamination. Therefore, sustainable alternatives such as minimum quantity lubrication (MQL), dry machining, and biodegradable cutting fluids have gained increasing attention. This review article provides a comprehensive analysis of the types of cutting fluids, various cooling and lubrication techniques, and recent advancements in their application. Additionally, it highlights the challenges associated with conventional cutting fluids and explores environmentally friendly alternatives to promote sustainable manufacturing practices.