Solar energy is almost an interminable source that can supply the required energy of the world. The cheapness and renewability of this unlimited energy source have led to research activities in order to develop new techniques for using it. Meanwhile by the emergence of nanofluids which are suspension of nanoparticles in base liquids, new class of solar collectors known as direct absorption solar collectors has emerged. In these collectors nanofluid which is directly exposed to sun rays serve as both the absorbent and the carrier medium. The sun rays are absorbed by the nanofluid and are converted to heat which is then conveyed away by the fluid flow. So far only few aspects of direct absorption solar collectors have been studied. The goal of the present research is to investigate the parameters affecting the efficiency of these collectors. The key step in modeling the direct absorption is estimation of the nonofluids extinction coefficient. First, the extinction coefficients of nanofluids are calculated by using three different theories, i.e. Rayleigh, Mie, and Maxwell-Garnett theories. However, comparison of the results with experimental one’s shows that the Mie theory is the best one among the three theories for estimation of extinction coefficient. In order to calculate the efficiency of a direct absorption collector, one needs to solve the two-dimensional energy equation and one-dimensional radiative transfer equation. Effect of various parameters on the efficiency of a direct absorption solar collector is then evaluated. The parameters whose effects are investigated are: diameter of nonoparticles, volume fraction of nanoparticles, collector geometry, transmissivity of the glass cover, and effect of installing an ideal reflector at the bottom of the collector. Also effect of base fluid on the collector performance is investigated. The results show that increase in the nanoparticle diameter increases the efficiency moderately. By increasing the volume fraction of nanoparticles, the collector efficiency grows rapidly at first, and then remains constant. Increasing the length of the collector has less impact on the collector efficiency than its height. The higher the glass transmissivity, the higher is the efficiency. Using an ideal reflector at the bottom of the collector is a suitable way to reduce the cost of the collector. The results show that the collector height is a key parameter to the collector efficiency, because as the collector height and depth of nanofluid increases, sun rays are absorbed more efficiently. Also effects of four different base fluids, i.e. water, ethylene glycol, propylene glycol, and Trminol (VP-1), on the collector efficiency is investigated. Keywords: direct absorption solar collector, extinction cofficient, nanofluid, Mie Theory, Rayleigh Theory, Maxwell-Garnett Theory