The development of water-based lubricants with high efficiency and environmental protection is an effective approach to reducing friction and wear. In this study, CuS nanoparticles with nanoparticle sizes of about 4–6 nm were surface-modified by the in situ methoxylpolyethylene glycol xanthate (MPEGOCS2K) surface modification. By introducing an appropriate organic surface capping layer, nanoparticles with excellent chemical stability and desirable long-term aqueous dispersion stability can be prepared using in situ surface modification techniques. It has been discovered that CuS nanoparticles can greatly improve the tribological properties and load-carrying capacities (PB) of the water–EG (ethylene glycol) system. The addition of 2 wt % CuS nanoparticles results in a 59% reduction in friction coefficient and an approximately 77% increase in the PB value. More importantly, the wear volume is reduced by 90%, showing a very significant antiwear effect. The mechanism study indicates that well-dispersed CuS nanoparticles can be adsorbed onto the worn surface between frictional pairs, consequently reducing the interfacial friction. Additionally, CuS nanoparticles can undergo chemical reactions to form a friction film, enhancing lubrication performance. CuS nanofluid is an excellent water-based lubricant additive. The outstanding antiwear and friction reduction effects of the obtained CuS nanofluids indicate promising potential for industrial production applications.