A review of grease degradation mechanisms and existing grease models is presented, followed by a detailed thermodynamic analysis of grease degradation. Fundamental formulations are derived from thermodynamic laws and applied to instantaneous nonlinear response of grease to loading. The resulting model of grease degradation relates grease shear stress response to mechanical work, temperatures and environmental effects via the irreversible entropy generated by these dissipative interactions. The model is experimentally verified, and a universally consistent grease characterization methodology is described. A near 100% agreement between the grease model and nonlinear data from uncontrolled experimental measurements is achieved. The model also gives rise to new material and process parameters to characterize grease for performance and hence, system optimization.