Convective heat transfer and pressure drop using alumina-water nanofluid under laminar and turbulent flow regimes using the viscous laminar model and standard k-ε model have been studied. A circular microchannel heat exchanger (0.1 m long and 0.5 mm inner diameter) with constant wall temperatures, and 0 to 5% Al2O3-water nanofluid flowing inside and cold water flowing outside was used. This experiment showed that convection heat transfer increased remarkably with the increase of nanoparticle concentration under various values of Reynolds numbers. The heat transfer coefficient increased 15% compared to pure water under 5% volume concentration for the laminar regime and 12% for the turbulent zone (Nusselt number decreased about 2.5%). The pressure drop of the nanofluid increased as the volume concentration increased. However, compared with pure water, the change in pressure drop was significant. Therefore, the use of a nanofluid has a great penalty on pressure drop.