An understanding of thermal hydraulics, its basic phenomena, and its application to nuclear power plants is vital to safe as well as efficient design and operation. Thermal hydraulics for two-phase flow and heat transfer with nuclear applications has been studied for roughly 50 years, and the current body of knowledge is extensive. Yet, there remain safety issues, and the licensing of new light water reactor designs or new analysis methodologies is rarely simple. This is due to the state of the art in reactor thermal hydraulics as well as the perspective that the regulator, in this case the U.S. Nuclear Regulatory Commission (NRC), has toward that field of study. This paper discusses the state of the art in nuclear thermal hydraulics, the regulator's unique role and perspective, and a view of current challenges. The discussion is meant to point out how the regulator's perspective has been shaped and hopefully provide some guidance on fulfilling research needs for future applications that may need NRC review.