In this study, the performance enhancement for water chiller (air conditioner) with carbon nanotube nanofluid is investigated. The nanofluid with carbon nanotube is used as the heat transfer medium in the evaporator. The water chiller is tested at the standard rating condition with flow rate from 60 l/min to 140 l/min following the requirements of ARI 550/590. For MWCNT-water at 0.1 vol.%, thermal conductivity of nanofluid is enhanced by 1.3%. Furthermore, the coefficient of performance (COP) of the water chiller is increased by 5.15% relative to that without nanofluid. Nanofluid is of great scientific interest because the new thermal transport phenomena surpass the fundamental limits of conventional macroscopic theory of suspension. The application of nanofluid is thus very important for potential thermal management. It certainly deserves further intense study.