Excessive cracking can be a serious durability problem for reinforced concrete structures. In recent years, addition of microencapsulated phase change materials (PCMs) to concrete has been proposed as a possible solution to crack formation related to temperature gradients. However, the addition of PCM microcapsules to cementitious materials can have some drawbacks, mainly related to strength reduction. In this work, a range of experimental techniques has been used to characterize the microcapsules and their effect on properties of composite cement pastes. On the capsule level, it was shown that they are spherical, enabling good distribution in the material during the mixing process. Force needed to break the microcapsules was shown to depend on the capsule diameter and the temperature, i.e., whether it is below or above the phase change temperature. On the cement paste level, a marked drop of compressive strength with increasing PCM inclusion level was observed. The indentation modulus has also shown to decrease, probably due to the capsules themselves, and to a lesser extent due to changes in porosity caused by their inclusion. Finally, a novel micro-cube splitting technique was used to characterize the tensile strength of the material on the micro-meter length scale. It was shown that the strength decreases with increasing PCM inclusion percentage, but this is accompanied by a decrease in measurement variability. This study will contribute to future developments of cementitious composites incorporating phase change materials for a variety of applications.