In recent times, nanoparticles-dispersed ester fluids are reported to exhibit improved thermal and electrical properties for its application in insulation system. In the present study, insulating nanoparticles of silica were dispersed in synthetic ester fluid to improve electrical characteristics of the base fluid. A two-step process involving mechanical shear mixing and ultrasonication was adopted for producing nanofluids. Physical and chemical characterization of nanofluids were carried out to estimate stability of the nanofluid with optimum concentration of nanoparticles and surfactants. To substantiate the influence of nanoparticles and surfactant on the dielectric properties of the nanofluid, conductivity measurements were made at low and high electric field conditions. It was observed that in the presence of electric field, the motion of ions is inhibited due to its trapping by the surface of nanoparticle, leading to lower ionic mobility. To explore the governing mechanisms further, electrical insulating performance of the nanofluid and corona discharge activity were investigated under AC and DC voltages using ultrahigh frequency (UHF) technique. This study has also shown an increase of 30% improvement in the corona inception voltage (CIV) upon addition of nanoparticles. The discharge activity was also mitigated due to incorporation of nanofillers in the fluid. The energy of discharge was found to be lower in nanofluid as compared to base fluid. It was evident from the present studies that silica-based nanofluids have shown superior dielectric performance compared to the base synthetic ester fluid.