The growing demand for higher productivity, product quality, and overall economy in manufacturing by drilling particularly to meet the challenges thrown by liberalization and global cost competitiveness, insists high material removal rate, high stability, and long life of the cutting tools. However, high production machining with high cutting velocity, feed, and depth of cut is inherently associated with the generation of large amount of heat and this high cutting temperature not only reduces dimensional accuracy and tool life but also impairs the surface finish of the part. The dry drilling of steels is an environmentally friendly machining process, but has some serious limitations like higher cutting temperature, tool wear, and greater dimensional deviation. Conventional cutting fluids (wet machining) eliminate such problems but have some drawbacks. Cutting fluids possess a significant portion of the total machining cost. Thus, machining under Minimum Quantity Lubrication (MQL) condition has drawn the attention of researchers as an alternative to the traditionally used wet and dry machining conditions with a view to minimizing the cooling and lubricating cost as well as reducing cutting zone temperature, tool wear, surface roughness, and dimensional deviation. In this paper, the effects MQL on dimensional deviation, drilling force, and torque during drilling AISI 1040 steel are examined and compaired with drilling under dry and wet conditions.