Emulsions of vegetable oils were prepared using ionic and non-ionic surfactants for use as metal working fluids. The conditions for an enhanced mutual miscibility for soybean oil or modified soybean oil and water were investigated to prepare emulsions for vegetable oil-based components. Oil modification was achieved using ozonation and sulfurization reactions. The products were characterized using Fourier transform infrared spectroscopy (FTIR) and nuclear magnetic resonance (NMR). The viscosities of the modified oil were considerably higher than the starting oil. The emulsions were obtained with the aid of three different surface-active agents at room temperature. The stability and efficiency of these emulsions were evaluated. These emulsions also showed good stability and anticorrosion properties. The phase behavior was evaluated using phase diagrams. Cryo-scanning electron microscopy (cryo-SEM) was used in describing the oil–water interaction during the emulsion formation. It was found that the phase behavior was dependent on the nature and the concentration of surfactant used. Modified soybean oil required comparatively increased amounts of surfactant than the regular oil to obtain a stable emulsion.