The present work aims to study the influence of Fe3O4-water nanofluids on capillary performance in microgrooves wick for guiding the promotion of thermal performance of two-phase heat transfer devices. Capillary-rise experiment was conducted to measure the capillary performance at different temperatures. Contact angle and permeability were derived from the result of the experiment to evaluate the wetting and the flow in the groove. It was found that the nanofluids significantly enhanced capillary performance in the wick with improving the wetting and the flow. Depending on the temperature and particle concentration, Capillary Performance Parameter was increased by 8–75% in comparison to that for the base liquid. There exists an optimal concentration at which the decrease of the contact angle and the increase of the permeability achieve the maximum. Raising the temperatures of the fluid and the wick facilitated the nanofluids to improve the wetting but diminished the friction reduction. The fundamental mechanism is analyzed based on the discussions of the roles of particle migrations existing in the cross-section of the groove and particle aggregation.