Nanofluid fuels, an exciting new class of nanotechnology-based fuels, are liquid fuels with a stable suspension of nanometer-sized particles. Depending on the physical and chemical properties of the added nanomaterials, nanofluid fuels can achieve better performance, e.g., increased energy density, easier and faster ignition, enhanced catalytic effects, improved combustion efficiency, and reduced emissions. In aerospace engineering, interest is increasing in developing a new generation of hypersonic flights, which largely depend on the ability to use liquid fuels that offer high- energy density, short ignition delays, and high reaction rates. Nanofluid-type fuels with the addition of nanoenergetics or nanocatalysts could potentially be used for hypersonic vehicles. Nanofluid fuels can also be used for power/thrust generation under special circumstances such as unmanned aerial vehicles (UAVs) or power microelectromechanical systems (MEMS). However, knowledge about nanofluid fuels remains very limited. This research starts down the path of developing a fundamental understanding of these types of fuels. It explains the fundamental mechanisms of how the addition of nanoscale materials to liquid fuels can enhance combustion performance.