Present work focuses on heat transfer and pressure drop studies of Al₂O₃ based nanofluids and nanoencapsulated composite phase change material (NECPCM) based nanofluids in mini channel heat sink. Composite PCM was prepared by homogeneously mixing paraffin wax and petroleum jelly. The encapsulation of composite PCM in polystyrene shells was done by mini emulsion polymerization and various characterizations were done to study phase change behaviour. The concentration of NECPCM and Al₂O₃ nanofluids was fixed based on zeta potential measurements. Experiments were conducted in mini channel integrated with a heat sink, consisting of 13 rectangular channels and hydraulic diameter of 2.6 mm. Maximum heat transfer enhancement of 28% was obtained for NECPCM nanofluid against 10% enhancement for Al₂O₃ nanofluid. Higher pressure drop was observed for Al₂O₃ nanofluid as compared to NECPCM nanofluids, especially at higher flow rates. Maximum improvement in figure of merit (FOM) obtained for NECPCM nanofluid and Al₂O₃ nanofluid was 24% and 5% respectively, as compared to DI water. The experimental results show that there exists an optimum flow rate for NECPCM based nanofluids to achieve maximum FOM, which depends on length of the channel and residence time of particles.