<p>Water-based cutting fluids often suffer from poor lubricity and susceptibility to rust, severely limiting their application. Developing a cutting fluid that synergistically combines excellent lubrication and rust prevention remains a challenge. An advanced polyalkylene glycol (PAG) synthetic cutting fluid (PSCF) was successfully prepared by mixing additives such as PAG, organic molybdenum, sodium molybdate, triethanolamine, and defoamer via mechanical stirring method. This study aimed to develop an environmentally friendly water-based fluid and explore the synergistic effects between its lubricating and rust-preventing components, namely PAG and sodium molybdate. During friction, PSCF exhibited excellent lubrication performance, with its extreme pressure anti-wear and friction-reducing coefficient increasing by 9.3% compared to a commercial cutting fluid (CCF). In laminated rust prevention tests, the PSCF-treated cast iron surface remained free of visible rust, whereas conspicuous rust appeared on the CCF-treated specimen under the same conditions. A tribofilm was generated on the friction contact interface, consisting of MoO₃, MoO₂, Fe₂O₃, and Fe₃O₄, with a thickness of ~ 28&#xa0;nm. After calculations, <InlineEquation ID="IEq1"> <EquationSource Format="TEX">\(\lambda\)</EquationSource> <EquationSource Format="MATHML"><math> <mi>λ</mi> </math></EquationSource> </InlineEquation> &lt; 1, indicating that the lubrication regime of PSCF was boundary lubrication. The formed tribofilm not only protected the metal surface from rusting but also served as a boundary lubrication film to prevent direct contact between asperities, thereby reducing surface roughness.</p>