Insulating oil modified by nanoparticles (often called nanofluids) has recently drawn considerable attention, especially concerning the improvement of electrical breakdown and thermal conductivity of the nanofluids. In this paper, three sized monodisperse Fe3O4nanoparticles were prepared and subsequently dispersed into insulating vegetable oil to achieve nanofluids. The dispersion stability of nanoparticles in nanofluids was examined by natural sedimentation and zeta potential measurement. The electrical breakdown strength, space charge distribution, and several dielectric characteristics, for example, permittivity, dielectric loss, and volume resistivity of these nanofluids, were comparatively investigated. Experimental results show that the monodisperse Fe3O4nanoparticles not only enhance the dielectric strength but also uniform the electric field of the nanofluids. The depth of electrical potential well of insulating vegetable oils and nanofluids were analyzed to clarify the influence of nanoparticles on electron trapping and on insulation improvement of the vegetable oil.