Phase change materials (PCM) are widely used for energy storage applications worldwide. The objective of the study is to review the current state of research on PCM materials, energy storage, environmental aspects and identifying potential research areas which needs focus to make this technology widely marketable and economically promising. The paper presents PCM research status, material properties, microencapsulation, shape stabilization techniques, commercial applications and environmental issues and also covers areas which have not been given much attention in previous studies like toxicity, health hazards, fire retardation techniques and current market scenario. The study shows that salt hydrates are safe if carefully handled and commercial grade paraffins being flammable, release toxic vapors thus are potential health hazard so need to be used carefully. Further research on fire retardation of PCM is found lacking in literature. Critical issues to ensure long term performance, are discussed which will help researchers to identify appropriate PCM for different commercial applications. New innovative PCM materials are identified although these are not used in real applications as yet. The commercial potential of PCM products is presented which shows that these materials have promising solutions for textiles, heat or cold storage during transits, pain relief packs, vaccine and blood storage where maintenance of a critical temperature is important. These materials could significantly cut down the air conditioning demands in future provided the current challenges are met. With increased awareness and stricter environmental regulations in future, PCM market potential is expected to rise.