By contrast with conventional heat transfer fluids, the usage of Microencapsulated phase change material (MPCM) suspended in conventional cooling fluids such as water; has shown enhanced heat transfer characteristics. This is due to their higher apparent specific heat values when subjected to heating within their phase change temperature range. The present study investigates numerically the impact of using MPCM slurry on heat transfer coefficient, and pressure drop for laminar thermally developing flow inside rectangular channel subjected to constant heat flux. The MPCM slurry consists of MPCM particles suspended in water as a base coolant. Lagrangian model was used to simulate the transport of MPCM particles through the flow domain by using ANSYS-FLUENT solver. Furthermore, the thermophysical properties of the MPCM particle were defined through the implementation of User-Defined Functions (UDF) available in FLUENT solver. The simulation results were compared to experimental data found in the literature and showed good agreement. The effect of varying MPCM mass concentration inside the slurry was also investigated to record their effect on heat transfer, pressure drop, and channel temperature. It was found that the heat transfer coefficient of MPCM slurry was noticeably increased when compared to the single phase fluid (water), but this comes on the expense of severe increase in the pressure drop. Moreover, a significant drop in the upper channel wall temperature was achieved due to phase change process of the slurry.