A method is disclosed for eliminating or reducing greatly the occurrence of bacteria and other microorganisms in commercial drilling fluids without the use of biocides or other chemicals. The method includes heating the fluid to obtain an initial microbe kill and passing the heated drilling fluid through a controlled cavitation reactor to expose the fluid to highly energetic shock waves and pressure variations within a cavitation zone of the reactor. The reactor includes a cylindrical rotor rotatably mounted within a cylindrical housing. The rotor has bores formed through its peripheral surface and the cavitation zone is defined between the peripheral surface of the rotor and the inner surface of the housing. As the rotor is rotated at a rapid rate with drilling fluid being urged through the cavitation zone, continuous cavitation events are induced in the fluid within the bores and these cause shockwaves and pressure variations to propagate through drilling fluid within the cavitation zone. The flow rate and rotation rate are selected so that the shock waves and pressure variations are sufficiently energetic to destroy the cellular structure of bacteria and other microorganisms in the drilling fluid thereby exterminating them.