Energy conversion and utilization are continuous but ever increasing processes for sustainability and economic development. Environmental concerns, such as thermal and air pollution, have dictated the practices of energy conservation and recovery, as well as the implementation of clean energy sources. Heat exchangers are an important component for processes where energy conservation is achieved through enhanced heat transfer. Such issues as increased energy demands, space limitations, and materials savings have highlighted the necessity for miniaturized light-weight heat exchangers, which provide high heat transfer for a given heat duty. However, while traditional heat exchangers employ conventional tubes (⩾6 mm) with various cross-sections, orientations, and even the enhanced surface textures, the technology is nearing its limits. Microchannels (broadly ⩽1 mm) represent the next step in heat exchanger development. They are a particular target of research due to their higher heat transfer and reduced weight as well as their space, energy, and materials savings potential over regular tube counterparts. In contrast to traditional tube heat exchangers, the heat transfer and fluid flow correlations, and the systematic design procedures are not yet well established for microchannels. It remains to be established whether the classical fluid flow and heat transfer theories and correlations are valid for microchannels. Numerous investigations are underway with researchers consolidating evidence on both sides of this question. This paper surveys the published literature on the status and potential of microchannels, and it identifies research needs, and defines the scope for long-term research. Based on results from the review, an air-to-liquid crossflow experimental infrastructure has been developed and commissioned. It will be used to investigate the heat transfer and fluid flow for a variety of working fluids in different microchannel test specimens. Further information and the heat balance status of the developed test facility are also presented. Copyright © 2010 John Wiley & Sons, Ltd.