Thermochromic dielectrics can actively report temperature anomalies by color changes, which provides a novel route toward the intelligentization of next-generation power equipment. However, thermochromism is commonly realized from the structural and phase transition of materials, the effect of which on electrical insulating performances is still unclear, restricting their applications in power equipment. Herein, the role of phase transition on breakdown characteristics of microcapsule-based thermochromic epoxy dielectrics (TEDs) is studied. Differential scanning calorimetry (DSC) results show that the core of thermochromic microcapsules will undergo phase transitions between 50°C and 68°C. The DC and AC breakdown strength of TEDs are both enhanced compared to those of neat epoxy resins in a broad temperature range of 30°C∼90°C, indicating the phase transition in microcapsules will not severely injure the dielectric strength of TEDs. With increased microcapsule content, the DC breakdown strength of TEDs gradually enhances while the AC breakdown strength first improves and then diminishes. The enhanced breakdown strength of TEDs is proposed to derive from the barrier effect at the interfacial regions between the microcapsule shells and epoxy matrix, which could significantly suppress the charge transport in TEDs. The decreased AC breakdown strength under the higher microcapsule content could be ascribed to the raised dielectric relaxation loss from the microcapsule core.