Because of the excellent performance and special machining properties, Inconel718 has aroused widespread concern in recent years. In this paper, physical and chemical phenomena in tool-chip interface and tool wear mechanism in machining Inconel 718 under water vapor + air cooling lubrication cutting conditions were studied. The research results showed that water vapor + air can increase the chemical reaction rate. The newly generated oxides Cr2O3, Fe2O3, Fe3O4 formed an unstable film. The chemical film can provide lubrication in tool-chip interface, which can effectively inhibit the tool-chip adhesion and abrasive wear. These oxides are the main heat medium between tool and chip. Therefore, with the generation and falling off of these oxides in cutting process, the heat that transferred into the cutting tool can be reduced. It makes cutting temperature decrease indirectly. Compared with the dry cutting, under water vapor + air cooling lubrication cutting conditions, tool wear mechanism mainly relates the weak oxidation wear of W and Co element instead of serious adhesion and abrasive wear, thereby enhancing the tool life.