Nanoparticles have been used in conventional enhanced oil recovery to improve the oil recovery efficiency. In this review, we analyzed the roles of nanoparticles in improving enhanced oil recovery. We focused on elucidating the fundamental mechanisms that regulate nanoparticle-induced enhanced oil recovery, including surface wettability alteration, interfacial tension reduction, mobility ratio increase, emulsion stabilization, and foam stabilization. We also discussed factors that control the success of nanoparticle-induced enhanced recovery. Finally, we outlined the current challenges and future research directions with respect to the applications of nanoparticles in enhanced oil recovery.