A metalworking lubricant comprising about 1-20 wt % natural or synthetic oil; about 0.5-30 wt % of a water-soluble surfactant, preferably a nonionic surfactant; about 1-20 wt % of an organic cosurfactant, preferably 1,2-octanediol; and about 50-97.5 wt % water containing less than about 1 wt % dissolved inorganic salts. The lubricant is preferably a lyotropic liquid crystal.