Rotary systems and nanofluids are frequently used in energy conversion and management systems. In this paper, a numerical study is performed to evaluate the application of metallic nano-particles in a rotary system filled with a lubricant from first and second laws of thermodynamics points of view. The nano-lubricant (lubricant based nanofluid) is considered inhomogeneous with dependent transport properties on nano-particles volume fraction, nano-particles size and the temperature. A two-phase model is undertaken to account for the Brownian motion and thermophoresis diffusion. The principal objective centers in the advantages and penalties of using nano-lubricant over the pure lubricant on the basis of first and second law (of thermodynamics). The numerical results demonstrate that the nano-particles enhance the thermal performance of the rotary system. However, undesirable aspect from hydro-dynamical and second law (of thermodynamic) perspectives are reported. While a nano -lubricant with limited volume fraction in low speed rotary system is recommended, the disadvantages of nano lubricants with high volume fractions and/or used in a high-speed rotary system are dominant to nano-lubricants advantages and must be avoided. (C) 2017 Elsevier Ltd. All rights reserved.