This paper presents a three-dimensional model describing thermal and hydrodynamic characteristics of a Microtube heat sink with tangential impingement with nanoencapsulated phase change materials (NEPCM) slurry as coolant. In this study, octadecane for NEPCM and polyalphaolefin (PAO) is used as a base fluid. The continuity, momentum, and energy equations are solved using a finite volume method. The model is validated by comparing results with available data in the literature. The effects of dominant parameters including mass concentration and melting range of NEPCM as well as Reynolds number on temperature uniformity, thermal resistance, Nusselt number, pressure drop and generated entropies in the system are investigated. Results indicated that adding NEPCM to base fluid leads to considerable heat transfer enhancement. However, using NEPCM slurry as coolant has also induced drastic effects on the pressure drop that increases with mass concentration and Reynolds number. It was found that that an increase in nanoparticles mass concentration, inlet Reynolds number and melting range of NEPCM, results in a higher Nusselt number, better temperature uniformity and lower thermal resistance. Furthermore, the effects of different parameters on slurry entropy production are demonstrated. It is found that generated total entropy decreases with increasing mass concentration and Reynolds number. (C) 2012 Elsevier Ltd. All rights reserved.