This work introduces a novel method that improves the thermal performance of a conventional concentric tube heat exchanger. The introduced method includes inserting porous substrates at both sides of the inner tube wall. The porous substrates improve the convective heat transfer coefficient between the tube wall and the fluid. This improvement is investigated numerically and its effects on the effectiveness of the heat exchanger are evaluated. The present numerical results show that inserting the porous substrate may enhance the heat exchanger effectiveness considerably for both parallel flow and counter flow arrangements, especially at high values of the heat capacity ratios. In the current study, the effect of inserting porous substrates on the pumping head of the fluid is also investigated.