This study investigates the flow and heat transfer characteristics of microencapsulated phase change material suspensions in a square cavity by developing a coupled two-phase flow model that integrates the lattice Boltzmann method and discrete element method. The partially saturated cell method is employed to simulate the solid–liquid interface, while the effective specific heat method is adopted to capture the phase change behavior of microcapsule particles. A comprehensive analysis is conducted to examine the effects of microcapsule concentration, Rayleigh number, phase change temperature, and particle size on the suspension's flow and heat transfer performances. The results reveal that the inclusion of microcapsule particles significantly enhances the effective specific heat capacity of the suspension. Particle aggregation behavior is primarily influenced by the Rayleigh number. At lower Rayleigh numbers, particles are randomly distributed, while rapid aggregation occurs due to thermophoretic forces at high Rayleigh numbers. At a certain microcapsule concentration, the suspension achieves an optimal balance between heat capacity enhancement and flow stability. The results indicate that the microcapsule particles with a diameter of 75 μm can effectively release latent heat while avoiding the pronounced fluctuations associated with larger particles. Furthermore, the highest latent heat release efficiency is observed when the phase change temperature is close to the average cavity temperature. This study demonstrates that the Rayleigh number plays a pivotal role in governing the transition of the flow regime from laminar to turbulent by modulating the buoyancy-to-viscous force ratio, which in turn influences particle aggregation and heat transfer intensity of microencapsulated phase change material suspensions.