Nitinol shape memory alloys (SMAs) are renowned for their unique ability to revert to their original shape after deformation. This property is highly advantageous in medical, aerospace, and industrial applications. This study investigates using vegetable oils namely sesame, canola, and sunflower oils as dielectric fluids in the micro-electrical discharge (μ-ED) milling of Nitinol SMAs. The research evaluates how these eco-friendly dielectric mediums affect machining performance, focusing on material removal rate (MRR) and tool wear rate (TWR). Optimized machining parameters, including pulse on time, pulse off time, voltage, tool rotation, and capacitance, were identified to enhance MRR and reduce TWR. Biomedical characterization of the machined samples involved cytotoxicity tests to ensure their safety and compatibility for medical use. These tests confirmed that the materials did not induce harmful cell damage, meeting stringent medical-grade requirements. The results demonstrate that vegetable oils serve as a sustainable alternative to conventional dielectric fluids and enhance the machined Nitinol’s biocompatibility. This study underscores the potential of vegetable oils in promoting environmentally friendly manufacturing practices while achieving high-quality outcomes for medical-grade Nitinol components. Based on the results, canola oil emerges as the best option for machining Nitinol SMA, offering a balanced performance with a commendable MRR and moderate TWR with highest cell proliferation up to 179.89%, along with enhanced debris flushing and cooling efficiency.