Microencapsulated phase change materials (mPCM) slurries have been used as the working fluids to enhance heat transfer compared with pure water due to their high latent heat and almost constant temperature during the phase change. A test rig has been built to measure heat transfer and pressure drop during the mPCM slurry flow in microchannels. Local surface temperature and heat flux along the channels are determined from temperatures measured at 98 precisely-known locations in the aluminum test block by inverse solution of the conduction equation (Yu et al. (2014)). The mass concentration of the mPCM slurry varies from 0 to 5%. The mass flow rate varies from 3.3 to 6.6 g/s. The results of the mPCM slurry are also compared with those of pure water. The results showed that 5% mass concentration of mPCM slurry showed local wall temperature reduction and increase in local heat flux as compared to pure water. This enhancement in heat transfer performance of mPCM slurry depends on the mass flow rate of mPCM slurry flow inside the microchannels.