Nanolubricants have attracted great interest due to the promise of friction and wear reduction by introducing nanoparticles. To date, the foremost challenge for developing a new nanolubricant is particle suspension. To understand the mechanisms of nanoparticle dispersion and identify bottlenecks, we conducted a comprehensive review of published literature and carried out an analysis of dispersion based on available data from the past 20 years. This research has led to three findings. First, there are two primary methods in dispersion: formulation with dispersant and surface modification. Second, surfactant and alkoxysilanes are primary chemical groups used for surface modification. Third, functionalization using surfactant is found to be suitable for nanoparticles smaller than 50 nm. For larger particles (>50 nm), alkoxysilanes are the best. The existence of a critical size has not been previously known. To better understand these three findings, we conducted an analysis using a numerical calculation based on colloidal theory. It revealed that a minimal thickness of the grafted layer in surfactant-modified nanoparticles was responsible for suspending small nanoparticles. For larger nanoparticles (>50 nm), they were suitable for silanization of alkoxysilane due to increased grafting density. This research provides new understanding and guidelines to disperse nanoparticle in a lubricating oil.