Purpose The purpose of this study is to numerically analyze the mixed convection and entropy generation in an annulus with a rotating heated inner cylinder for single-wall carbon nanotube (SWCNT)-water nanofluid flow using local thermal nonequilibrium (LTNE) model. An examination of the system behavior is presented considering the heat-generating solid phase inside the porous layer partly filled at the inner surface of the outer cylinder. Design/methodology/approach The discretized governing equations for nanofluid and porous layer by means of the finite volume method are solved by using the SIMPLE algorithm. Findings It is found that the buoyancy force and rotational effect have an important impact on the change of the strength of streamlines and isotherms for nanofluid flow. The minimum average Nusselt number on the inner cylinder is obtained at Ra$_E$ = 10$<^>4$, and the minimum total entropy generation is found at Re = 400 for given parameters. The entropy generation minimization is determined in case of different nanoparticle volume fractions. It is observed that at the same external Rayleigh numbers, the LTNE condition obtained with internal heat generation is very different from that without heat generation. Originality/value To the best of the authors' knowledge, there is no previous paper presenting mixed convection and entropy generation of SWCNT-water nanofluid in a porous annulus under LTNE condition. The addition of nanoparticles to based fluid leads to a decrease in the value of minimum total entropy generation. Thus, using nanofluid has a significant role in the thermal design and optimization of heat transfer applications.