<p>The rising global energy requirement and the adverse environmental impacts associated with fossil fuel utilization have emphasized the necessity of renewable energy sources. Nevertheless, renewable energy sources' inherent intermittency and unpredictability require efficient energy storage solutions. Thermal energy storage (TES) has evolved as a feasible approach to increase the efficiency and stability of renewable energy systems. Of the various TES forms, latent heat storage (LHS) with phase change materials (PCMs) is highly favored for its large energy storage density and capability to retain an almost constant temperature during phase transition. Despite their benefits, PCMs face challenges like leakage during melting, poor thermal conductivity, and corrosion, which hinder practical applications. The microencapsulation technique has been developed to overcome these difficulties by surrounding the PCM with a polymeric or inorganic shell to produce enhanced microencapsulated phase change materials (MPCMs). This technique minimizes the reactivity of PCMs with their surroundings, improves mechanical stability, and increases heat transfer efficiency. The study offers a comprehensive overview of sustainable MPCMs, including microencapsulation materials, synthesis methods, and characterization techniques. It explores the diverse applications of sustainable MPCMs across sectors such as construction, textiles, foams, and the medical industry. Moreover, this review discusses recent experimental, computational fluid dynamics (CFD), and analytical modeling studies on MPCMs, outlining significant advancements and future research directions in TES applications.</p>