We examine the dielectric constant of nonpolar fluids by direct Monte Carlo simulations on the basis of the polarizable hard sphere (PHS) model, where the spheres carry molecular polarizabilities. Point dipoles are induced in the spheres partly by an external electric field and partly by other molecules. It has been known that the Clausius-Mosotti equation needs a correction due to mutual polarization between molecules. We reproduce the qualitative behavior found in experiments: the correction increases with increasing density, reaches a maximum, and decreases at high densities. We show that the classic theory of Kirkwood and Yvon is quantitatively correct for the PHS model.