Steam production is essential for a wide range of applications, and currently there is still strong debate if steam could be generated on top of heated nanoparticles in a solar receiver. We performed steam generation experiments for different concentrations of gold nanoparticles dispersions in a cylindrical receiver under focused natural sunlight of 220 Suns. Combined with mathematical modelling, it is found that the initial stage of steam generation is mainly caused by localized boiling and vaporization in the superheated region due to highly non-uniform temperature and radiation energy distribution, albeit the bulk fluid is still subcooled. Such a phenomenon can be well explained by the classical heat transfer theory, and the hypothesized ‘nanobubble’, i.e., steam produced around the heated nanoparticles, is unlikely to occur under normal solar concentrations. For future solar receiver design, attention should be paid to focus and trap more solar energy at the superheated region while minimizing the temperature rise of the bulk fluid.