Solar water heating system is convincing technology to convert solar energy into thermal energy. According to the survey, approximately 42% of refined crude oil is used in industries and commercial applications for heating processes. Fossil fuel is the main energy source that is depleting continuously. Solar energy is an environment-friendly energy source, which can fulfill energy demand. Solar thermal collectors are most popular in domestic as well as industrial sectors for water heating due to their ease of operation and simple maintenance. Extensive work is going on to improve the thermal performance of solar thermal collectors using passive techniques. Passive techniques include the use of nanofluid, twisted tape, Phase Changing Materials. Active and passive techniques have a significant contribution to solar thermal collector thermal performance enhancement. This paper reviews the work carried out and current progress to enhance the thermal efficiency of solar water heaters using nanofluid. In addition to this, a detailed discussion and limitations of existing research have made from this discussion, research gaps are identified and possible future modifications are suggested.