The aim of the paper is to investigate the effect of size of multiwalled carbon nanotubes (MWCNTs) as additives for dispersion in gear oil to improve the tribological properties. Since long pristine MWCNTs tend to form clusters compromising dispersion stability, they are mildly processed in a ball mill to shorten the length and stabilized with a surfactant before dispersing in lubricant. Investigations are made to assess the effect of ball milling on the size and structure of MWCNTs using electron microscopy and Raman spectroscopy. The long and shortened MWCNTs are dispersed in EP 140 gear oil in 0.5% weight. The stability of the dispersed multiwalled carbon nanotubes is evaluated using light scattering techniques. The antiwear, antifriction, and extreme pressure properties of test oils are evaluated on a four-ball wear tester. It is found that ball milling of MWCNTs has a strong effect on the stability and tribological properties of the lubricant. From Raman spectroscopy, it is found that ball milling time of up to 10 hours did not produce any defects on the surface of MWCNTs. The stability of the lubricant and the antiwear, antifriction, and extreme pressure properties have improved significantly with dispersion shortened MWCNTs. Ball milling for longer periods produces defects on the surface of MWCNTs reducing their advantage as oil additives.