Innovations in the field of nanotechnology have potential to improve industrial productivity and performance. One promising applications of this emerging technology is using nanofluids with enhanced thermal properties. Nanofluids, engineered colloidal suspensions consisting of nano-sized particles (less than 100nm) dispersed in a basefluid, have shown potential as industrial cooling fluids due to the enhanced heat transfer characteristics. Experiments are conducted to compare the overall heat transfer coefficient and pressure drop of water vs. nanofluids in a laboratory scale industrial type shell and tube heat exchanger. Three mass particle concentrations, 2%, 4% and 6%, of SiO2-water nanofluids are formulated by dispersing 20 nm diameter nano particles in desalinated water. Nanofluid and tap water are then circulated in the cold and hot loops, respectively, of the heat exchanger to avoid direct particle deposition on heater surfaces. Interestingly, experimental result show both augmentation and deterioration of heat transfer coefficient for nanofluids depending on the flow rate through the heat exchangers. This trend is consistent with an earlier reported observation for heat transfer in micro channels. This trend may be explained by the counter effect of the changes in thermo-physical properties of fluids together with the fouling on the heat exchanger surfaces. The measured pressure drop in the nanofluids flow shows an increase when compared to that of basefluid that could limit the use of nanofluids in heat exchangers for industrial application.