Cross-stream migration of a deformable fluid particle is investigated computationally in a pressure-driven channel flow of a viscoelastic fluid via interface-resolved simulations. Flow equations are solved fully coupled with the Giesekus model equations using an Eulerian–Lagrangian method and extensive simulations are performed for a wide range of flow parameters to reveal the effects of particle deformability, fluid elasticity, shear thinning and fluid inertia on the particle migration dynamics. Migration rate of a deformable particle is found to be much higher than that of a solid particle under similar flow conditions mainly due to the free-slip condition on its surface. It is observed that the direction of particle migration can be altered by varying shear thinning of the ambient fluid. With a strong shear thinning, the particle migrates towards the wall while it migrates towards the channel centre in a purely elastic fluid without shear thinning. An onset of elastic flow instability is observed beyond a critical Weissenberg number, which in turn causes a path instability even for a nearly spherical particle. An inertial path instability is also observed once particle deformation exceeds a critical value. Shear thinning is found to be suppressing the path instability in a viscoelastic fluid with a high polymer concentration whereas it reverses its role and promotes path instability in a dilute polymer solution. It is found that migration of a deformable particle towards the wall induces a secondary flow with a velocity that is approximately an order of magnitude higher than the one induced by a solid particle under similar flow conditions.