Nanoparticles enhance the electrical insulation and thermal properties of vegetable oil, and such improvements are desirable for its application as an alternative to traditional insulating oil for power transformers. However, the traditional method of insulating nanofluids typically achieves high electrical insulation but low thermal conductivity. This work reports an environmentally friendly vegetable oil using exfoliated hexagonal boron nitride (h-BN) showing high thermal conductivity and high electrical insulation. Stable nanofluids were prepared by liquid exfoliation of h-BN in isopropyl alcohol. With 0.1 vol.% of the nano-oil, the AC breakdown voltage increased by 18% at 25 ∘ C and 15% at 90 ∘ C. Both the positive and negative lightning impulse breakdown voltages of the nanooil were also enhanced compared with those of the pure oil. Moreover, the thermal conductivity of the nano-oil increased by 11.9% at 25 ∘ C and 14% at 90 ∘ C. Given its high thermal conductivity, the nano-oil exhibited faster heating and cooling effects than the pure oil. Nano-oils with an electric field (either DC or AC) displayed a faster thermal response than that without an electric field. The reason is that h-BN is oriented under the electric field and formed a thermal network to increase the heat transfer.