Solid powder lubricants provide distinct advantages over conventional coolants in machining applications. Various novel approaches have been used over the years for delivering these lubricants to the machining zone. This work employs air-assisted approach using air as carrier medium and reports on the effects of “lubricant/air mixture ratio,” powder particle size,” and “lubricant laden airflow rate” on surface roughness, microhardness, and residual stresses when AISI 1045 steel is ground with boric acid as lubricant. Nested-factorial mixed model design of experiment is used for structured inquiry; two levels (25 and 96.5 μm) of lubricant “powder particle size” are in factorial arrangement with three levels (1:1/2, 1:1, 1:2) of “lubricant/air mixture ratio.” Three distinct levels of “lubricant laden airflow rate” are nested within the levels of “lubricant/air mixture ratio.” Results show that coarse particles and concentrated mixture give favorable results in general, except for residual stresses. Balanced analysis of variance (ANOVA) reveals that “powder particle size” is statistically significant (95% confidence) for all three response measures whereas “lubricant/air mixture ratio” is significant for microhardness and residual stresses.