In this paper, nanosized MoS₂ deposited on graphene (MoS₂/Gr) were prepared and used as additives in polyalkylene glycol (PAG) for steel/steel contact. Tribological results indicated that MoS₂/Gr suspended in PAG exhibited a substantial reduction in friction and wear compared to the neat oil and the oil plus graphene, microsized MoS₂ and graphene mixed with microsized MoS₂ at elevated temperature. The significantly better tribological behavior of this hybrid lubricant can be explained by the fact that nanosized MoS₂ on graphene can enter the contact area of the opposite sliding surfaces and form thin, durable, and stable surface boundary layers that maintain low friction and wear. Additionally, the thermal conductivity (TC) and rheological properties of this nanofluid were also investigated.