Liquid-cooled microchannel heat sinks are regarded as being amongst the most effective solutions for handling high levels of heat dissipation in space-constrained electronics. However, obstacles to their successful incorporation into products have included their high pumping requirements and the limits on available space which precludes the use of conventional pumps. Moreover, the transport characteristics of microchannels can be different from macroscale channels because of different scaling of various forces affecting flow and heat transfer. The inherent potential of microchannel heat sinks, coupled with the gaps in understanding of relevant transport phenomena and difficulties in implementation, have guided significant research efforts towards the investigation of flow and heat transfer in microchannels and the development of microscale pumping technologies and novel diagnostics. In this paper, the potential and capabilities of microchannel heat sinks and micropumps are discussed. Their working principle, the state of the art, and unresolved issues are reviewed. Novel approaches for flow field measurement and for integrated micropumping are presented. Future developments necessary for wider incorporation of microchannel heat sinks and integrated micropumps in practical cooling solutions are outlined