This paper is an analytical study of entropy generation in the laminar flow of nanofluids in a circular tube. The tube is immersed in an isothermal external fluid - which is the most general thermal boundary condition but has not been studied in much detail in literature. Two nanofluids, namely - water - Al2O3 and ethylene glycol-Al2O3 have been chosen for this study. The effects of the external Blot number, non-dimensional temperature difference and volume fraction on the entropy generation characteristics of the flow have been shown through graphs and the physical reasoning behind the observed trends has been discussed threadbare. It is shown that the addition of nanoparticles is beneficial only at smaller Reynolds number and for less viscous base fluids. Most importantly, it is proved that the entropy generated in the case of a tube immersed in an isothermal external fluid is bounded by those for uniform heat flux and uniform wall temperature boundary conditions. (C) 2015 Elsevier Ltd. All rights reserved.