Efficient cooling is critical for compact and high-performance electronic devices. This study presents a numerical investigation of heat transfer enhancement in a cold plate using Fe2O3–water nanofluid. A cold plate with rectangular fins and a central slit inlet was modeled and computationally analyzed. Water was initially used to establish a baseline, followed by a 2% volume concentration Fe2O3–water nanofluid to assess enhancement. Key performance metrics such as convective heat transfer coefficient, skin friction, pressure, and temperature distributions were evaluated across Reynolds numbers ranging from 200 to 800. Results showed that the nanofluid significantly improved thermal performance, particularly at higher flow rates, with peak heat transfer coefficients occurring at the plate center. However, increased flow rates also led to higher skin friction and localized thermal gradients. The findings highlight the potential of Fe2O3-based nanofluids in enhancing cold plate cooling efficiency while also underlining the importance of optimizing flow distribution to maintain uniform thermal performance. This work offers insights into designing cost-effective and energy-efficient cold plate systems for electronics and battery cooling applications.