Mechanism of thermal conductivity of nanofluids is analysed and calculated, including Brownian motion effects, particle agglomeration and viscosity, together influenced by temperature. The results show that only Brownian motion as reported is not enough to describe the temperature dependence of the thermal conductivity of nanofluids. The change of particle agglomeration and viscosity with temperature are also important factors. As temperature increases, the reduction of the particle surface energy would decrease the agglomeration of nanopartides, and the reduction of viscosity would improve the Brownian motion. The results agree well with the experimental data reported.