Recently, water-based nano-additives have attracted more attention with the resurrection of water lubrication owing to the increasing awareness of environmental protection and energy-saving. Highly water-dispersible carbon nitride nanosheets (C₃N₄ nanosheets), obtained via a high-yield and low-cost hydrothermal approach, were first used as a novel and environmentally-friendly nano-additive for water-based lubrication. The tribotest results exhibited that the tribological performances of C₃N₄ nanosheets in the water-based lubricant are highly sensitive to their adding concentrations. It was found that a C₃N₄ nanosheet concentration of 0.2 wt% could decrease the friction and wear in steel-steel contacts by 49.0% and 54.2%, respectively. The lubrication performances of C₃N₄ nanosheets as additives were much better than those of C₃N₄, attributed to their regular shape, good water dispersibility, and high reactivity. In addition, C₃N₄ nanosheets as additives exhibited a long service life even under harsh lubrication conditions. In addition, the molecular dynamics (MD) simulation technique was first employed to study the lubrication performances and lubrication regimes of C₃N₄ nanosheets. By combining the results of MD simulations and wear track surface analyses, the formation of water-based lubricating film and tribochemical film (mainly composed of organic compounds, metal nitrides, iron oxides, metal carbonates, and C₃N₄ nanosheets) coupled with the interlayer sliding and polishing effects of C₃N₄ nanosheets were primarily responsible for the excellent tribological performances of C₃N₄ nanosheets.