Present study carries out an exergy analysis for nanofluids in microchannels. For this, two microchannels with diameter of 218 μm and 303 μm are chosen due to availability of experimental data.. The alumina nanoparticles with 45 nm average size are dispersed in DI water. The stability of these nanofluids is controlled by their pH. Three concentrations of 0.25 vol%, 0.5 vol% and 1vol% are chosen to observe the volume fraction effect. For the entropy generation analysis Bejan equations for internal flow are used. The order of magnitude method was used to simplify the equations. Initially, the analysis is carried out with the standard correlations (Dittus-Boelter and Blasius equations) for tube flow for laminar region. Frictional and thermal entropy generation rate ratios were found comparable and neither of them can be neglected. The entropy generation rate ratio was above unity for 218 μm channel while, it was below unity for 303 μm channel. The prediction of entropy generation rate ratio was higher for experimental correlations compared to that of theoretical correlations. The entropy generation number was higher for 303 μm channel and more prone to change with concentration. The thermal part of entropy generation was the major part of total entropy generation for 303 μm channel. Also, the absolute entropy generation was higher for 303 μm channel compared to 218 μm channel. Copyright © 2011 by ASME.