Purpose: This paper aims to numerically investigate the heat transfer and entropy generation characteristics of water-based hybrid nanofluid in natural convection flow inside a concentric horizontal annulus. Design/methodology/approach: The hybrid nanofluid is prepared by suspending tetramethylammonium hydroxide-coated Fe₃O₄ (magnetite) nanoparticles and gum arabic (GA)-coated carbon nanotubes (CNTs) in water. The effects of nanoparticle volume concentration and Rayleigh number on the streamlines, isotherms, average Nusselt number and the thermal, frictional and total entropy generation rates are investigated comprehensively. Findings: Results show the advantageous effect of hybrid nanofluid on the average Nusselt number. Furthermore, the study of entropy generation shows the increment of both frictional and thermal entropy generation rates by increasing Fe₃O₄ and CNT concentrations at various Rayleigh numbers. Increasing Rayleigh number from 103 to 105, at Fe₃O₄ concentration of 0.9 per cent and CNT concentration of 1.35 per cent, increases the average Nusselt number, thermal entropy generation rate and frictional entropy generation rate by 224.95, 224.65 and 155.25 per cent, respectively. Moreover, increasing the Fe₃O₄ concentration from 0.5 to 0.9 per cent, at Rayleigh number of 105 and CNT concentration of 1.35 per cent, intensifies the average Nusselt number, thermal entropy generation rate and frictional entropy generation rate by 18.36, 22.78 and 72.7 per cent, respectively. Originality/value: To the best knowledge of the authors, there are not any archival publications considering the detailed behaviour of the natural convective heat transfer and entropy generation of hybrid nanofluid in a concentric annulus.