Thermal dispersion model has been used here to simulate heat transfer of water-Al2O3 nanofluid. A new form for dispersion thermal conductivity has been introduced in which non-uniform concentration distribution is applied on the model. It was observed that the non-uniformity of concentration increases at greater Reynolds numbers and average concentrations. An experimental set-up was made, and an experimental study was conducted to find the empirical coefficient in the dispersion thermal conductivity. The obtained results show that the developed dispersion model is able to properly simulate heat transfer of the nanofluid and provides more accurate results in comparison with a homogenous model.