The present work investigates the fabrication, thermal conductivity (TC) and rheological properties of water based carbon nanotubes (CNTs) nanofluids (NFs) prepared using a two-step method. As-received (AR) CNTs heated and the effect of heat treatment was studied using X-ray diffraction and thermogravimetric analysis. The AR-CNTs and heat-treated CNTs (HT-CNTs) were dispersed with varying concentration of surface modifiers Gum Arabic (GA) and TritonX-100 (TX) respectively. It was found that heat treatment of CNTs effectively improved the TC and influenced rheological properties of NFs. Scanning electron microscopy analysis revealed TX modified NFs showed better dispersion ability compared to GA. Surface modification of the CNTs was confirmed by Fourier Transformation Infrared (FTIR) analysis. Zeta potential measurement showed the stability region for GA modified NFs in the pH range of 5-11, whereas pH was between 9.5-10 for TX NFs. The concentration of surface modifier plays an extensive role on both TC and rheological behavior of NFs. A maximum TC enhancement of 10% with increases in viscosity around 2% for TX based HT-CNTs NFs was measured. Finally comparison of experimental TC results with the predicted values obtained from a model demonstrated inadequacy of the predictive model for CNT NFs system.