The microencapsulation technique has been proven as a powerful and flexible tool to design and develop a multifunctional additive for various applications. The significant characteristics of this technique center around the ability to control the release of the core active ingredients by tuning the porosity and the permeability of the shell. However, this original concept has faced a major roadblock in lubricant research since it causes a major breakage of the microcapsules (∼70%) under severe stressed-shearing conditions. The shell fragments generated from such unwanted events significantly influence the friction and wear performances of the counterpart, thus limiting the ongoing research of the microencapsulation technique in tribology. To solve such technical bottlenecks, we develop a new strategy of utilizing the microencapsulation technique which focuses on the smart responsiveness of the shell with the base lubricant and the synergy between the incorporated materials. In this study, the smart-responsive colloidal capsule has been developed based on our proposed concept that demonstrates outstanding performances in improving the lubricity of the conventional melt lubricant (by ∼70%) under hot metal working conditions. An unprecedented oxidation-reduction (by ∼93%) and the first instance of ultralow friction (0.07) at elevated temperatures (880 °C) have been initially achieved. This work opens a new avenue of customizing a multifunctional additive package by utilizing the smart colloidal capsules in lubrication science.