Experimental and theoretical investigations on forced convection have generally indicated superior heat transfer capabilities of nanoparticle suspensions (nanofluids) compared to the corresponding base fluids. However, some studies on natural convection heat transfer in nanofluids have shown negative impacts on heat transfer capabilities, while used in vertical fluid columns. The present investigation is aimed at understanding the heat transfer performance of oxide nanofluids in a rectangular natural circulation loop. The circulation in a natural circulation loop is more or less similar to that in a forced circulation system, but with low velocities. Hence, it is important to observe and quantify the heat transfer behavior of nanofluids in natural circulation loops. In the present work, investigations have been performed on a vertical heater-vertical cooler natural circulation loop, designed to operate stably at all operating conditions considered, based on a linear stability analysis, which was confirmed further using the experimental results. Evaluation of the transient heat transfer performance of the experimental system indicates that aqueous nanofluids containing aluminum oxide and copper oxide have superior heat transfer capabilities in the rectangular natural circulation loop, compared to pure water.