In this paper, a novel algorithm for fractional time delay estimation is proposed. It is based on the maximum correntropy criterion and the Lagrange fractional delay filter (FDF). The instantaneous correntropy is introduced to measure the similarity between received signals and estimated ones in the proposed algorithm. It leads to an effective performance under both Gaussian and impulsive noises. The performances, including the convergence of the algorithm and the variance of the time delay estimation, are theoretically analyzed. Simulations demonstrate that the time delay estimation precision of the proposed algorithm is higher than that utilizing the mixed modulated Lagrange explicit time delay estimation (MMLETDE) especially under low generalized signal-to-noise ratio (GSNR).