By replacing conventional gray cast iron (GI) with compacted graphite iron (CGI), automotive industry could keep up with stricter regulations on emissions and demands on higher engine performance. CGI has improved properties as to GI but is more difficult to machine. This study evaluates sustainable machining performance during finish face milling when using minimum quantity lubrication applied vegetable oil, resulting in 8% or 17–23% improved tool life respectively as to dry conditions. The main part of the study investigates the wear mechanisms in commercial Ti(C,N)-Al2O3 CVD-coated cemented carbide. The coating degrades by mechanically induced cracking and fractures, oxidation of adhered CGI inside cracks, diffusional dissolution of Ti(C,N) layer. Formation of softer (Mg,Fe,Mn)Al2O4 spinel is not observed but could be an expected reaction product. Other oxide inclusions, when deposited on cemented carbide surfaces, prevents adhesion of CGI material, and can reduce the wear rate where they are present. CGI adhering to cemented carbide induces diffusional loss of cobalt and carbon that eventually forms (Fex,Co1-x)3C iron carbide at the tool-workpiece interface which can reduce the diffusion rate. Novel findings also relates to the formation of 15 μm deep cracks in the cemented carbide due to inward diffusion of Fe accompanied by its oxidation that speeds up the oxygen ingress and further oxidation of W and Co. Oxidation was found to provide a positive effect when the adhered CGI completely oxidized to form Fe2SiO4 oxide ceramic Tool Protection Layer which slowed down tool material degradation.