In this research, the effects of using Phase Change Materials (PCM) as storage medium on the performance of a solar water heater have been experimentally investigated. A type of paraffin wax is used as PCM in spherical capsules as storage material in the tank of solar water heater. The solar tank is of jacketed shell type. Effect of three solar radiation intensity, i.e. weak, mean and strong are studied. The energy and exergy efficiencies of water heater and the time length the heater can supply hot water have been compared before and after using of PCM in the tank. It is observed that by using PCM in the tank the energy storage density is increased in the tank up to 39% and the exergy efficiency is enhanced up to 16%. Also, it is observed that solar water heater with PCM, can supply hot water with specified temperature at 25% longer time. Improvement in thermal stratification has also been observed by examining temperature histories of different water layers in the tank. (C) 2013 Elsevier Ltd. All rights reserved.