Maxwell’s classical model for predicting effective thermal conductivity of colloidal solution predicts the thermal conductivity of nanofluids quite satisfactorily. However, Maxwell’s model does not consider the effect of interfacial layer, Brownian motion of nano-particle and nanoparticle aggregation. In this paper, the effect of interfacial layer on thermal conductivity is considered. A simple expression has been derived to determine thermal conductivity of nanofluid considering interfacial layer formed on the nano particles. The thermal conductivity of the interfacial layer has been precisely determined and results are found to be closer to the experimental values, hence, further improving the results of classical Maxwell model.