Nanolubricant is prepared by dispersing SiO₂ nanoparticles into synthetic refrigerant compressor oil, polyalkylene glycol (PAG) using two-step method. Thermal conductivity and rheological properties of nanolubricant at various volume fractions (0.07 to 0.6vol %) in the temperature range 20 °C to 90 °C have been investigated. The results show that as the volume fraction increases thermal conductivity and viscosity increase. Conversely, the thermal conductivity and viscosity are found to be decreasing with increase in temperature. The highest thermal conductivity and viscosity of the nanolubricant(volume fraction 0.6%) are 1.31 and 10.34 times greater than that of pure lubricant. The measured thermal conductivity and viscosity are compared with that obtained from classical models and the classical models fail to predict these properties accurately. The non-newtonian shear thinning behaviour of SiO₂-PAG nanolubricant was confirmed by computing power law and consistency indices. At higher particle concentrations and lower temperatures, nanolubricant shows thixotropic behaviour.