A mechanochemical effect is investigated to reduce diamond tool wear by means of applying a surfactant to low-carbon magnetic iron during diamond turning. Orthogonal microcutting demonstrates the manifestation of the mechanochemical effect through the reduction of cutting forces by 30%, which supports the notion of lower cutting temperatures for reduced tribo-chemical wear. This is affirmed by the reduction in tool flank wear by up to 56% with the mechanochemical effect during diamond turning. While wear suppression increases by 9.4–16.15% with feeds from 5–20 μm/rev, it is not proportional to the reduction in cutting forces (31–39.8%), which suggests that the reduction in cutting energy does not directly correspond with the reduction in heat energy to sustain tribo-chemical tool wear. The strain localization during chip formation is proposed to serve as a heat source that hinders the wear mitigation efficiency. Finite element simulations demonstrate the heat generation during strain localization under the mechanochemical effect, which counteracts the reduced heat conversion from the plastic deformation and the transfer from tool–chip contact. Hence, this paper demonstrates the effectiveness of the mechanochemical method and its ability to reduce tool wear, but also establishes its limitations due to its inherent nature for heat generation.