Thermal performance of cylindrical heat pipe with nanofluid is studied based on the laws of thermodynamics. The objective of the present work is to investigate nanofluids effect on different sources of entropy generation in heat pipe caused by heat transfer between hot and cold reservoirs and also frictional losses and pressure drop in the liquid and vapor flow along heat pipe. An analytical study was performed to formulate all sources of entropy generation and the predicted results are compared with experimental ones. Cylindrical miniature grooved heat pipes of 250 mm length and 6.35 mm outer diameter were fabricated and tested with distilled water and water based TiO2 and Al2O3 nanofluids at different concentrations as working fluids. Analytical and experimental results revealed that the entropy generation in heat pipes decreases when nanofluids are used as working fluids instead of basefluid which results in improved thermal performance of the heat pipes with nanofluids. (C) 2015 Elsevier B.V. All rights reserved.