Four micro-holes were made using micro-EDM on the rake face of the cemented carbide (WC/TiC/Co) tools. CaF2 solid lubricants were embedded into the microholes to form self-lubricating tool (SLT-1). Dry machining tests on hardened steel were carried out with the SLT-1 self-lubricating tool and conventional tool (SLT-2). The cutting forces, tool wear and friction coefficient were measured and compared. It was shown that the cutting performance of SLT-1 self-lubricating tool was greatly improved compared with that of the SLT-2 conventional tool. Through the analysis of cutting force theory and test results, the mechanism of cutting performance improvement was considered to be the formation of a self-lubricating film on the rake face which decreases the shear stress and the reduction of contact length between chip and tool.