This paper analyzes the effect of viscous dissipation on the thermal performance of balanced flow cross flow microchannel heat exchangers. The cross flow microchannel heat exchanger analyzed in this paper is one that is subjected to axial heat conduction. Governing equations are developed for each of the fluids and the wall separating the fluids. The equations are solved simultaneously using the numerical technique of finite difference method to obtain the temperature profile. The effectiveness of each fluid is determined using the temperature profile thus obtained. The effectiveness and the temperature of the fluids are found to depend on NTU, axial heat conduction parameters and the viscous dissipation parameter. In the presence of axial heat conduction the effectiveness of the fluid decreases for a specific NTU. In addition, the effectiveness of the fluids decreases with increase in axial heat conduction parameters at a particular NTU. The effectiveness of the hot fluid in the presence of viscous heat dissipation alone decreased at a particular NTU. On the other hand the effectiveness of the cold fluid for the same amount of viscous heating improved at a specific NTU. The combined effect of axial heat conduction and viscous dissipation on the hot fluid is to decrease its effectiveness. With regard to the cold fluid effectiveness it can either increase or decrease due to the combined effect of axial heat conduction parameter and viscous dissipation.