The effective thermal management of electronic system holds the key to maximize their performance. The recent miniaturization trends require a cooling system with high heat flux capacity, localized cooling, and active control. Nanomagnetic fluids (NMFs) based cooling systems have the ability to meet the current demand of the cooling system for the miniaturized electronic system. However, the thermal characteristics of NMFs have a long way to go before the internal mechanisms are well understood. This review mainly focuses on the three aspects to establish a correlation between the thermal and rheological properties of the NMFs. First, the background, stability, and factors affecting the properties of the NMFs are discussed. Second, the ferrohydrodynamic equations are introduced for the NMFs to explain the rheological behavior and relaxation mechanism. Finally, different theoretical and experimental models are summarized that explain the thermal characteristics of the NMFs. Thermal characteristics of the NMFs are significantly affected by the morphology and composition of the magnetic nanoparticles (MNPs) in NMFs as well as the type of carrier liquids and surface functionalization that also influences the rheological properties. Thus, understanding the correlation between the thermal characteristics of the NMFs and rheological properties helps develop cooling systems with improved performance.