Extensive studies can be found in the literature on the development of nanofluids and improvements of their thermofluid characteristics both theoretically and experimentally. On the contrary, most of the studies on nanofluids have been conducted from the first law of thermodynamics perspective. The number of investigations on the treatment of nanofluids is less from the second law of thermodynamics (entropy generation analysis) point of view. Nanoparticles available in nanofluids enhance the heat transfer characteristics of the fluid, but at the same time the viscous dissipation due to the increase of the viscosity may be affected considerably. Therefore, entropy generation in nanofluid flows due to both heat transfer and viscous dissipation should be considered to optimize a thermal system’s operating conditions. In addition, complicationssuch as agglomeration and settlement of the nanoparticles introduce new challenges for the thermal and entropy generation analyses.