Two-dimensional conjugate heat transfer performance of stepped lid-driven cavity was numerically investigated in the present study under forced and mixed convection in laminar regime. Pure water and Aluminium oxide (Al2O3)/water nanofluid with three different nanoparticle volume concentrations were considered. All the numerical simulations were performed in ANSYS FLUENT using homogeneous heat transfer model for Reynolds number, Re = 100 to 500 and Grashof number, Gr = 5000, 13,000 and 20,000. Effective thermal conductivity of the Al2O3/water nanofluid was evaluated by considering the Brownian motion of nanoparticles which results in 20.56% higher value for 3 vol.% Al2O3/water nanofluid in comparison with the lowest thermal conductivity value obtained in the present study. A solid region made up of silicon is present underneath the fluid region of the cavity in three geometrical configurations (forward step, backward step and no step) which results in conjugate heat transfer. For higher Re values (Re = 500), no much difference in the average Nusselt number (Nuavg) is observed between forced and mixed convection. Whereas, for Re = 100 and Gr = 20,000, Nuavg value of mixed convection is 24% higher than that of forced convection. Out of all the three configurations, at Re = 100, forward step with mixed convection results in higher heat transfer performance as the obtained interface temperature is lower than all other cases. Moreover, at Re = 500, 3 vol.% Al2O3/water nanofluid enhances the heat transfer performance by 23.63% in comparison with pure water for mixed convection with Gr = 20,000 in forward step. © 2021, The Author(s).