The challenges in drilling problems such as formation damage, pipe sticking, lost circulation, poor hole cleaning, and fluid loss need better solutions. Nanotechnology, by means of nanofluids, provides potential solutions for the development of improved water-based mud (WBM). This work presents the use of nanofluids of CuO and ZnO prepared in various base fluids, such as xanthan gum, polyethylene glycol, and polyvinylpyrrolidone (PVP), which are commonly used in oilfield operations, for the development of nanofluid-enhanced drilling mud (NWBM). In this paper, formulations of various nanofluids with varying concentrations of nanoparticles, such as 0.1, 0.3, and 0.5 wt%, were investigated for their effect on the thermal, electrical, and fluidloss properties of NWBM. In addition, these results also were compared with those obtained with microfluids of CuO and ZnO for the microfluid-enhanced drilling mud (MWBM) to understand the effect of particle size. It is observed that the use of nanofluids in WBM helps to improve their thermal properties, with an associated direct impact on their cooling efficiency at downhole and surface conditions compared with those using microfluid. Filtrationloss and filter-cake-thickness studies on WBM, MWBM, and NWBM were also carried out with an American Petroleum Institute (API) filter press. It is observed that the fluid loss decreases with addition of the nanofluids and microfluids in WBM, with nanofluids showing an improved efficacy over microfluids. The studies, in general, bear testimony to the efficacy of nanofluids in the development of next-generation improved water-based drilling fluids suitable for efficient drilling. ©2016 Society of Petroleum Engineers.