Single-phase convective heat transfer of nanofluids has been studied extensively, and different degrees of enhancement were observed over the base fluids, whereas there is still debate on the improvement in overall thermal performance when both heat transfer and hydrodynamic characteristics are considered. Meanwhile, very few studies have been devoted to investigating two-phase heat transfer of nanofluids, and it remains inconclusive whether the same pessimistic outlook should be expected. In this work, an experimental study of forced convective flow boiling and two-phase flow was conducted for Al2O3–water nanofluids through a minichannel. General flow boiling heat transfer characteristics were measured, and the effects of nanofluids on the onset of nucleate boiling (ONB) were studied. Two-phase flow instabilities were also explored with an emphasis on the transition boundaries of onset of flow instabilities (OFI). It was found that the presence of nanoparticles delays ONB and suppresses OFI, and the extent is correlated to the nanoparticle volume concentration. These effects were attributed to the changes in available nucleation sites and surface wettability as well as thinning of thermal boundary layers in nanofluid flow. Additionally, it was observed that the pressure-drop type flow instability prevails in two-phase flow of nanofluids, but with reduced amplitude in pressure, temperature, and mass flux oscillations.