In the present investigation, water based multi-walled carbon nanotube (MWCNT) dispersed nanofluid was produced and used as a cutting fluid in small quantity cooling lubrication (SQCL) assisted grinding of hardened AISI52100 steel. The work material was ground by an alumina wheel. The SQCL technology utilizes atomized aerosol of liquid grinding fluid. Use of MWCNT nanofluid aerosol in place of soluble oil was found to be substantially beneficial in reduction of specific energy and development of compressive residual stress on ground surface. The steady and lower value of the force ratio (tangential to normal grinding force, Ft/Fn) was suggestive of the superior lubrication and grit sharpness retention ability of the aerosol of MWCNT nanofluid. Higher compressive residual stress on the ground surface under MWCNT nanofluid environment suggests lesser grinding zone temperature, which can be attributed to its superior wettability, lubricity and heat dissipation ability of the MWCNT nanofluid. The consumption rate of grinding fluid in SQCL was varied. It could be reduced to 200 ml/h for MWCNT nanofluid to obtain an almost similar or better effect to that of 500 ml/h for soluble oil. Lesser surface tension of MWCNT nanofluid, compared to its counterpart, seemed to facilitate wetting, thus improving lubrication and heat transfer capability further. © 2021 Taylor & Francis Group, LLC.