The hydrodynamic and heat-transfer characteristics of slurry containing microencapsulated phase-charge materials (MCPCMs) were investigated experimentally for use as a heat-transfer fluid. Pressure drop, and local convective heat-transfer coefficients of die slurry flows in a circular tube with uniform heat flux were measured. Slurries consisting of octadecane (C18H38) contnined in 2-10-mu m-dia. microcapsules and pure water were used! The particle volume fractions in the slurry,were varied up to 0.3. Results showed that increases in particle volume fractions caused the slurry flow structure to charge from turbulent to laminar, and the pressure-drop reduction of the slurry flow relative to a single-phase water flow was under the same flow-rate conditions. The heat-transfer performance of the slurry also depended on the change in flow structure. When the MCPCMs melted the local heat-transfer coefficients for turbulent slurry flows increased relative to those for nonmelting slurry. Tills phenomenon was influenced by the MCPCM fraction, the degree of turbulence, and the heating rate at the tube wall. The experimental data will be useful in the design of thermal-energy transportation systems using MCPCM slurry.