This paper deals with the effect of axial heat conduction on the hot and cold fluid effectiveness of a balanced parallel flow microchannel heat exchanger. The ends of wall separating the fluids are subjected to Dirichlet boundary condition. This leads to heat transfer between the microscale heat exchanger and its surroundings and thereby leading to axial heat conduction through the wall separating the fluids. Three one dimensional energy equations were formulated, one for each of the fluids and one for the wall. These equations were solved using finite difference method. The effectiveness of the fluids depends on the NTU, axial heat conduction parameter, and the temperature of the ends of the wall separating the fluids. With decrease in temperature of the end wall at the inlet section of the fluids, while keeping the temp'erature of the other end wall constant, the effectiveness of the hot and cold fluid increased and decreased, respectively. When the temperature at the ends of the wall separating the heat exchanger is average of the inlet temperature of the fluids then there is no axial heat conduction through the heat exchanger. The effectiveness of a counter flow microchannel heat exchanger is better than that of a parallel flow microchannel heat exchanger subjected to similar operating conditions, i.e. axial heat conduction parameter and end wall temperatures.