In this work, Palygorskite (Pal) nanorods, chitosan (CS), and polyethylene glycol (PEG) are used to prepare new composite lubricants in order to improve the lubrication performance of water. The tribological experimental results showed that the composite lubricant composed with 1 wt% Pal, 10 wt% PEG and 2 wt% CS has excellent lubrication performance. The tribological data showed that the friction coefficient reached 0.021, and the composite lubricant lubrication performance was about 4 times higher than that of deionized water. The materials were characterized by scanning electron microscope (SEM), thermogravimetric analyses (TGA), differential scanning calorimetry (DSC), Fourier transform infrared (FT-IR), X-ray diffraction (XRD), and X-ray photoelectron spectroscopy (XPS), which revealed that the composite lubricant contained many oxygen-containing functional groups, and there was no chemical reaction between these functional groups. Instead, a lubricating film that can reduce friction and wear was formed through the hydrogen bond effect between functional groups. In this paper, a general and simple preparation method of new composite lubricant was proposed, which can be wildly used in many fields such as water-based lubrication.