Lubricants are used in numerous applications in our society, for instance, as hydraulic fluids. When used in forestry, 60-80% of these hydraulic fluids are released into the environment. This is one of the reasons for the growing interest for developing and utilising hydraulic fluids with good environmental performance. Another driving force in the development of hydraulic fluids is to replace fossil products with renewable ones. The aim of this paper is to investigate the environmental impact of two types of hydraulic fluids, one based on mineral oil and one on vegetable oil. The difference in environmental impact of using chemical or biocatalytic production methods is also assessed. This life cycle assessment is from cradle-to-gate, including waste treatment. A complementary, laboratory, biodegradability test was also performed. The functional unit is 1 l of base fluid for hydraulic fluids, and mass allocation is applied. A sensitivity analysis is performed to assess the impact of the energy used and of the allocation method. The impact categories studied are primary energy consumption, global warming potential (GWP), eutrophication potential (EP), acidification potential (AP), photooxidant creation potential (POCP) and biodegradability. The contribution to GWP and primary energy consumption was higher for the mineral oil-based hydraulic fluid than the vegetable oil-based hydraulic fluids. The contributions to EP and AP were higher for the vegetable oil-based hydraulic fluid than the mineral oil-based one. The vegetable oil-based hydraulic fluid had better biodegradability than the one based on mineral oil. The impact of production method was minor, thus the biocatalytic method gives no significant advantage over chemical methods concerning energy and environmental performance. For the environmental impact categories GWP, POCP and primary energy consumption, hydraulic fluids based on rapeseed oil make a lower contribution than a mineral oil-based hydraulic fluid. For EP and AP, the contributions of TMP oleate are higher than the contribution of mineral oil-based hydraulic fluid. The difference between the chemically catalysed method and the ezymatically catalysed method is negligible because the major environmental impact is due to the production of the raw materials. The vegetable oil-based hydraulic fluid, TMP oleate, was more biodegradable than the mineral oil-based hydraulic fluid.