The advancement of clean production using nanostructured materials in subtractive manufacturing processes has focused on replacing the use of liquid lubrication with solid lubricants coated to conventional cutting tools machining low carbon steel (∼0.2 wt % carbon). However, little is known about the wear mechanisms that dominate such tools when coated with functional graded nanostructured coatings. The present study follows an international standard for characterizing such wear (ISO 8688) but uses advanced measurement techniques such as x-ray fluorescence technology to measure the diffusion of chemical species from tool to workpiece and vice versa, that contributes to tool wear with the view to enhance the principles of cleaner production. The results show that when commercially-available tools coated with the appropriate functionally graded industrial coating, diffusion does not take place and creates an effective chemical barrier during machining. The experimental methods used in the study include machining workpieces using a CNC milling machine, tachometer for measuring spindle speed, dynamometer for measuring cutting forces, infra-red camera for measuring cutting temperatures, chemical species diffusion wear using x-ray fluorescence detector, and an optical microscope for measuring tool wear. Coupled with the physical measurement of wear, it is concluded that mechanical wear dominates the milling of a low carbon steel and that thermal properties of the coatings do not correlate with such wear. It is also concluded that flank wear as a function of volume of workpiece removed and machining duration (machining index) is a sound method for assessing the transition of the stages of wear during clean machining operations. The present study not only has implications for the design of better cutting tools, but also advances dry machining processes that eliminate the use of liquid lubricants making subtractive production processes cleaner. The main conclusions drawn from this study show that coated tools have a longer life under dry conditions compared to uncoated tools and that there is no correlation between coating properties and tool wear. Diffusion of chemical species into the cut chips did not occur because of the lack of thermally induced chemical wear of the cutting tool and that wear is caused by the gradual erosion of the flank face due to the chip abrading the cutting tool.