In many applications of high voltage engineering, electrical and thermal stresses increase due to an ongoing decrease of product dimensions. In particular, the electrical industry is interested in applying nanofluids in transformers to be able to decrease transformer size and weight. The requirement for nanofluids is to enhance the electrical insulation as well as the thermal conductivity of transformer oil. The focus of this thesis is to investigate how to improve the dielectric strength and thermal conductivity of mineral oil by introducing a low concentration of nanoparticles as well as to understand the possible mechanism behind the property changes. Stable dispersed nanoparticles are vital for the investigation of the properties of nanofluids. However, it can be a challenge to maintain the nano-meter size of nanoparticles due to the attractive force between nanoparticles, which can lead to the formation of agglomerations which eventually settle out of suspension. In this thesis, good and stable dispersed nanoparticles in mineral oil have been achieved by magnetic stirring and ultrasonic vibration at a relatively low concentration. The two types of nanofillers which were used to achieve stable dispersed nanofluids are silica and fullerene nanoparticles. The results of AC breakdown test results on nanofluids with up to 0.02 wt.% silica and nanofluids with up to 0.1 wt.% fullerene showed that both types of nanofluids exhibited enhanced breakdown strength compared with mineral oil. The enhancement increases with an increase of mass fraction. The effect is more significant at higher moisture content. The enhancement of the AC breakdown voltage due to silica nanoparticles is larger than for fullerene nanoparticles. Since silica is an insulating material and fullerene is a semi conductive material, the phenomena can't be explained by the theory of conductive nanoparticles acting as electron traps. Besides, moisture content plays an important role in the breakdown behaviour of mineral oil. So one possible explanation behind the enhanced AC breakdown voltage of silica nanofluids is that moisture is adsorbed on the surface of silica nanoparticles. However, fullerene is hydrophobic, therefore moisture adsorption can't be the reason for the enhanced breakdown strength of fullerene nanofluids. Partial discharge (PD) measurements gave more detailed information on the pre-breakdown phenomenon of dielectric nanofluids by recording the discharge pulse shape, inception voltage, total discharge magnitude and single discharge pulse amplitude. The PD results of mineral oil, 0.01 wt.% silica and fullerene nanofluids showed that silica nanoparticles increase the inception voltage, and decrease both the total discharge magnitude and the pulse amplitude of mineral oil significantly. The effect due to fullerene nanoparticles is similar but less than the effect of silica nanoparticles. The possible explanation of this phenomenon is that organic acid is adsorbed on the surface of the nanoparticles. The increased inception voltage and decreased PD discharge magnitudes of silica and fullerene nanofluids can be due to the decreased acidity in the nanofluids. The larger effect of silica nanoparticles on the dielectric strength of mineral oil compared with fullerene nanoparticles can be a result of the combination of acid and moisture adsorption on the surface of the nanoparticles. The effect of silica and fullerene nanoparticles up to 0.1% mass fraction on the thermal conductivity and viscosity of mineral oil is negligible. This is mainly due to the low concentration and limitation of stability of nanofluids. The stability and possible harmful effects of nanoparticles on health and environment are also discussed in this thesis. Finally, it was concluded that the dielectric strength of mineral oil is improved by adding a low concentration of nanoparticles. The possible explanation for this achievement and recommendations for further research are also described.