Nanofluids are a new class of nanotechnology-based heat transfer fluids engineered by dispersing and stably suspending nanoparticles with typical length on the order of 1–50 nm in traditional heat transfer fluids. For the past decade, pioneering scientists and engineers have made phenomenal discoveries that a very small amount of guest nanoparticles can provide dramatic improvements in the thermal properties of the host fluids. For example, some nanofluids exhibit superior thermal properties such as anomalously high thermal conductivity at low nanoparticle concentrations, strong temperature- and size-dependent thermal conductivity, a nonlinear relationship between thermal conductivity and concentration, and a threefold increase in the critical heat flux at a small particle concentration of the order of 10 ppm. Nanofluids are of great scientific interest because these unprecedented thermal transport phenomena surpass the fundamental limits of conventional macroscopic theories of suspensions. Therefore, numerous mechanisms and models have been proposed to account for these unexpected, intriguing thermal properties of nanofluids. These discoveries also show that nanofluids technology can provide exciting new opportunities to develop nanotechnology-based coolants for a variety of innovative engineering and medical applications. As a result, the study of nanofluids has emerged as a new field of scientific research and innovative applications. Hence, the subject of nanofluids is of great interest worldwide for basic and applied research. This paper highlights recent advances in this new field of research and shows future directions in nanofluids research through which the vision of nanofluids can be turned into reality.