This paper surveys heat transfer in nanofluids. It summarizes and analyzes the theories regarding heat transfer mechanisms in nanofluids, and discusses the effects of clustering on thermal conductivity. The heat transfer associated with conduction is presented through various experiments followed by a discussion of the theories that were developed as a result of these experiments. Relationships between thermal conductivity and various factors such as temperature, concentration, and particle size are also displayed along with a discussion on clustering and its effects on the thermal enhancement properties of nanofluids. There is a brief discussion on convection. Nanofluid convective heat transfer research may be classified by fluid conditions of laminar flow, turbulent flow, and pool boiling. The number of studies in these areas is limited, with the smallest number of studies having been reported in the last class of pool boiling. In addition, some controversy seems to exist in a couple of the publications. Owing to the limited data found in the reviewed literature, there is no definitive model presented. There is research currently being performed on the manipulation of the properties governing the thermal conductivity of nanofluids - the particle size, shape, and surface area. Other factors that affect heat transfer are the material of the nanoparticle used, particle volume concentration, and the fluid used. Although the interest in this relatively new class of fluids has generated many experimental studies around the world, there is still disagreement over several aspects of heat transfer in nanofluids, primarily concerning the actual mechanisms behind the increased thermal conductivity, and how other factors such as clustering affect the performance of the nanofluids. Although nanoparticles have greatly decreased the risks involved with the rapid settling and clustering of particles in suspension, there is still evidence of unwanted agglomeration which could cause erosion in pipes, and affect the overall conductivity of the liquid. Research is currently being conducted to determine how to minimize this unwanted grouping of particles so as to maximize the transfer of heat through the liquid. Many theories have been proposed for the problem of clustering such as adding surface treatments to the nanoparticles, modifying the methods used to disperse the nanoparticles in the base fluid, and agitating the nanofluids so as to break up any agglomerations. However, there is still no universal procedure to achieve a stable and durable suspension of particles with a low amount of agglomeration.