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This paper systematically studies the effect of Fe3O4 nanoparticle size on the insulation performance of nanofluid impregnated paper. Three kinds of Fe3O4 nanoparticles with different sizes and their nanofluid impregnated papers were prepared. Environmental scanning electron microscopy (ESEM) and infrared spectroscopy were used to analyze the combination of Fe3O4 nanoparticles and nanofluid impregnated paper. The effect of nanoparticle size on breakdown voltage and several dielectric characteristics, e.g., permittivity, dielectric loss, of the nanofluid impregnated paper were comparatively investigated. Studies show that the Fe3O4 nanoparticles were bound to impregnated paper fibers by O–H bonds, while the relative permittivity and dielectric loss of the nanofluid impregnated papers were increased. Meanwhile, the increase of trap depth, caused by the nanoparticles, can trap the electric charge and improve the breakdown strength. The test results show that the direct current (DC) and alternating current (AC) breakdown voltages of nanofluid impregnated paper increased by 9.1% and 10.0% compared to FR3 nanofluid impregnated paper, respectively.