The combustion behavior of rocket propellant grade 2 (RP-2) was investigated as a function of magnesium oxide (MgO) nanoparticles (i.e., 20 nm diameter) added at varied concentrations. The MgO nanoparticles were surface-treated with a long-chain carboxylic acid to aid their dispersion in RP-2. The fuel droplet regression rate, surface tension, and heat of combustion of RP-2 with MgO nanoparticle additives were measured to characterize combustion behavior. Heat of combustion and surface tension measurements varied negligibly among all samples indicating that calorific output and surface tension are not controlling parameters influencing fuel combustion behavior. However, fuel droplet regression rates were considerably increased by adding 0.5 wt % MgO from 0.225 to 66.16 mm/s, which is an improvement by 2 orders of magnitude. Further analysis showed that MgO particles enhance diffusive heat transfer, which promotes nucleation and disruptive burning throughout the three stages of regression, heating/evaporation (stage 1), combustion of RP-2 (stage 2), and combustion of carboxylic acid dispersant (stage 3), and, thus, lead to improved fuel droplet combustion.