Intrinsic low shear strength, excellent mechanical properties, and high thermal conductivity of two-dimensionalh-BN nanomaterials make them promising alternatives to conventional metal-/phosphorus-/sulfur-based additives for the development of eco-friendly lubricant formulation. However, the poor dispersibility ofh-BN nanomaterials in lubricating oils is a major challenge. Herein, a facile approach of strong alkali-assisted hydrothermal exfoliation and defect-sensitive etching ofh-BN powder is demonstrated. The cetyltrimethylammonium bromide (CTAB) is grafted on the active and polar sites ofh-BN nanosheets (h-BNNSs). DFT calculations, along with FTIR and XPS results, confirmed the synthesis ofh-BNNS-CTAB, which showed good dispersibility in SN-150 mineral lube base oil. The uninterrupted supply of highly dispersible minute dose ofh-BNNS-CTAB (0.003 wt %) to tribo interfaces of steel balls improved the lubrication properties of lube oil by decreasing friction (34%) and wear volume (75%). The enhanced tribo-performance is attributed to low shear strength arising from weakly stacked atomic lamellae inh-BNNS-CTAB and the tribo-induced deposition ofh-BN lamellae on the contact interfaces of steel balls. The present work proposes a novel strategy for developingh-BNNS-based high-performance lubricant formulation, which can effectively minimize frictional energy and material losses.