Water-based lubricants are inherently environmentally sustainable; however, their limited load-bearing capacity poses a critical challenge. This study was devoted to exploring the application of rare earth-based lubricant additives with excellent tribological properties to improve the extreme performances of water-based lubricant. A novel water-based lubricant additive, CeO 2/A-BDS composites, was developed by combining cerium oxide particles with acidified biodiesel soot. The composite particles exhibited excellent dispersion stability in water and superior tribological properties, significantly enhancing the load-bearing capacity of water-based lubricants. Through comprehensive chemical characterizations and simulation analyses, the tribological mechanism of CeO 2/A-BDS composites under high-load conditions was elucidated. This study presents a promising strategy for the development of environmentally friendly, high-performance lubricants.