Drilling fluid must fulfill various functions with a great impact on the drilling performance. Drilling fluid invasion can cause formation damage. Good quality mudcakes can prevent such damage. This research focuses on the lab techniques and performance results of testing innovative water-based drilling fluids containing nanoparticles (NPs) for minimizing formation damage at high-pressure/high-temperature (HP/HT) conditions. A couette type viscometer was used to examine the rheological properties of the drilling fluids tested in this research. Zeta potential measurements were conducted at different temperatures and concentrations to assess their stability and to investigate the role of charge potential. Indiana limestone outcrops were examined as the filter media for both static and dynamic filtration (up to 350°F and 500 psi) using a HP/HT dynamic filter press. The mudcakes were investigated using a computed-tomography (CT) scan, and Scanning Electron Microscopy-Energy Dispersive Spectroscopy (SEM-EDS). Inductively Coupled Plasma-Optical Emission Spectrometry (ICP-OES) was used to measure the concentrations of key ions in the filtrate fluids. A significant reduction in the filtrate fluid volume was achieved when using ferric oxide NPs (-43% for 0.5 wt%) compared to that of the base fluid. However, adding silica NPs led to an increase in the filtrate volume and mudcake thickness. Increasing the NP concentration resulted in an increase in the fluid loss and mudcake thickness. The mudcakes consisted of two layers, as indicated by the CT scan analysis. 0.5 wt% was found to be the optimal NP concentration, which provides less agglomeration and a reduction in the mudcake permeability by -76.4%. At this concentration, the ICP-OES analysis showed a higher cation dissociation, which promoted the formation of a different clay platelet microstructure. At a higher NP concentration, a new layer of NPs was formed in the mudcake, which adversely affects the mudcake characteristics, as demonstrated by CT scan analysis and SEM-EDS elemental mapping. The rheological measurements indicated a good rheology at different temperatures and NP concentrations. Moreover, the NPs helped to stabilize the viscosity and yield stress at high temperatures (up to 200°F). Aging at 350°F for 16 hours showed that NP-based drilling fluids remain stable with minor changes in rheological properties. The obtained rheological data for various NPs is fitted to the classical drilling fluid rheological models to determine the best fit-model, which can then be applied to an efficient design. This research provides a comprehensive evaluation of improved water-based drilling fluids, using ferric oxide and silica NPs for HP/HT applications. The examined NPs have the potential to enhance drilling fluid properties, which provides more efficient drilling operations and less formation damage.