The invention discloses an emulsified cutting fluid, a cutting diluent and preparation and application methods thereof. The emulsified cutting fluid is prepared from the following raw materials: 5-15% of distilled water, 3-10% of rust-inhibiting additive, 4-10% of triethanolamine, 4-10% of co-emulsifier, 3-10% of long-chain fatty acid, 2-3% of nonionic surfactant, 1-5% of coupling agent, 1-5% of hard water-inhibiting additive, 5-10% of extreme pressure additive, 40-60% of base oil, 1-2% of anticorrosion and bactericidal agent, 0.1-2% of copper-aluminum alloy protective agent and 0.5-1.0% of defoamer; the emulsified cutting fluid is stable in lubrication property, cleaning property and hard water resistance, and good in rust resistance. The emulsified cutting fluid does not contain chlorine, diamine, nitrite and other nitro compounds, and causes no pollution on the environment; besides, the emulsified cutting fluid has no pungent smell, the cut powder is easy to settle, and the service life of a cutter can be effectively prolonged.