Education.com has a lot of ideas for you and your second grader to consider: http://www.education.com/topic/great-science-fair-project-ideas/

Here's one that received praise from two other parents (see comments section)...

States of Matter in a Baggie
http://www.education.com/activity/article/states_of_matter_second/

And here are some other grade-appropriate ideas as well:

Magnets & Heat
http://www.education.com/reference/article/Ref_Magnets_Heat/

Decaying Food (my daughter really liked this one)
http://www.education.com/reference/article/Ref_Decaying_Food/

Saving Hot Water
http://www.education.com/reference/article/Ref_Saving_Hot_Water/

Whatever you choose, though, be sure that the project meets the requirements of your school's fair. Also, if you're not already familiar with the scientific method, you could read this article to better help your child with his/her project:

What is the Scientific Method?
http://www.education.com/reference/article/Ref_What_Scientific/

Good luck, have fun and I hope your child enjoys the learning!

Ants and the lifecycle of a queen ant would be a great one! My daughter did this and won in a science fair ;)

A good 2nd grade science fair project is making a biodome http://www.easy-kids-science-experiments.com/easy-science-fair-projects.html  which demonstrates environmental science prinicples.