Nanofluid offers more opportunities and challenges over the traditional surfactant and polymer solutions during enhanced oil recovery (commonly referred to as tertiary oil recovery) due to its remarkable properties. This review mainly discusses the preparation methods of amphiphilic nanoparticles due to their higher interface activity than sole hydrophilic or hydrophobic nanoparticles (SHNPs). The nanofluids' stability is reviewed in this work. Moreover, the mechanisms of nanofluids in enhancing oil recovery (N-EOR) in terms of interfacial tension reduction, wettability alteration, foam stabilization, emulsion stabilization, structural disjoining pressure, and depressurization-increasing injection are mainly summarized and reviewed. Also, the synergistic effects of nanofluids and traditional surfactants and polymers are discussed. Finally, nanofluids’ challenges and prospects are also outlined. The nanofluids can still be regarded as an outstanding candidate for enhancing oil recovery significantly in the future although there are limitations on their applications from laboratory scale to field scale.