Applying nanomaterials and nanotechnology in lubrication has become increasingly popular and important to further reduce the friction and wear in engineering applications. To achieve green manufacturing and its sustainable development, water-based nanolubricants are emerging as promising alternatives to the traditional oil-containing lubricants that inevitably pose environmental issues when burnt and discharged. This review presents an overview of recent advances in water-based nanolubricants, starting from the preparation of the lubricants using different types of nanoadditives, followed by the techniques to evaluate and enhance their dispersion stability, and the commonly used tribo-testing methods. The lubrication mechanisms and models are discussed with special attention given to the roles of the nanoadditives. Finally, the applications of water-based nanolubricants in metal rolling are summarised, and the outlook for future research directions is proposed.