Nanolubricants are suspensions of nanoparticles in base fluids, a new challenge for thermal sciences provided by nanotechnology. The objective of this work is to analyze the thermal and tribological properties of yttria stabilized zirconia (YSZ) nanolubricants. Nanosized YSZ particles were prepared by milling YSZ (10μm) in a planetary ball mill equipped with vials using tungsten carbide balls. After 40 hrs, milled YSZ nanoparticles of sizes ranging from 70-90nm were obtained.The nanoparticles were characterized by Energy Dispersive X-ray analysis (EDXA), Scanning Electron microscope (SEM), Transmission Electron Microscope, Thermo Gravimetric-Differential Scanning Calorimeter and non contact 3D surface profilometer and the images of the same were obtained. The heat transfer properties of automotive engine lubricants were determined by utilization of measured thermal conductivity, viscosity index, density, flash point, fire point and pour point, which revealed that lubricants with additive constituents have a significant effect on the resultant heat transfer characteristics of the lubricants. The YSZ nanoparticles incorporated lubricants were evaluated for their potentials as effective solid lubricants at room temperature by using ball-on-disk tribometer.The lubricant without nanoparticles has a co-efficient of friction of 0.08-0.1 and a wear rate in the order of 10-4 mm3/Nm, while the lubricant with yttria stabilized zirconia nanoparticles exhibits a steady state co-efficient of friction of less than 0.07 and a wear rate in the order of 10−6 mm3/Nm at room temperature. Scratches and furrows are considered as the dominating wear mechanism of the disc applied with lubricants. However, for the disc applied with YSZ nanolubricants, the formation and effective spreading of the YSZ lubricating films are the most important factor to reduce the friction and wear rate.