Nano-encapsulated PCM consists of a solid shell and a phase change material (PCM) in the core that improves the thermal properties of base fluids. The heat capacity of the nanofluid increases due to the latent heat of the NEPCM core and the heat transfer rate increases dramatically. Also, a phase change occurs in a certain range of temperature. In the present study, the core and shell of NEPCM are n-nonadecane and polyurethane, respectively. Mixed convection of water-NEPCM is simulated inside a square chamber with cold walls and a hot rotating cylinder in the center. Coupled PDE equations are solved by the SIMPLE algorithm and developing C++ code. The parameters of Grashof number, Reynolds number, intensity of stored energy in the core of NEPCM (χ), and fusion temperature (θf) have been studied on the flow pattern, temperature contour, heat capacity ratio (Cr) contour, and Nusselt number. Based on this study it can be concluded that in general the optimal state of θf is in moderate values or especially numbers close to 0.5 and at this range of θf, χ reduction can enhance Nusselt number more. Also, at high Gr number by increasing Re number, heat transfer rate reduces. The results also show that adding NEPCM can increase the Nusselt number by more than 13%.