Incorporation of phase change materials (PCM) into building envelope is found to be an innovative and effective way of decreasing the energy consumption and greenhouse gas emission in the building sector. In addition, isothermal energy storage nature of PCM could improve the occupant comfort and reduce the potential heat stress during extreme heat waves by cutting down the peak indoor temperature which, in turn, will result in reduced heat related mortalities. Therefore, this study investigated the effect of PCM in reducing potential heat stress risks in naturally ventilated residential buildings during heat waves using building simulation software EnergyPlus. The 2009 weather data of Melbourne, which is well known for the heat waves, has been used for the simulation. Discomfort Index (DI) has been used as an indicator for the heat stress which has three different categories: Mild, Moderate and Severe. From the simulation, it was observed that appropriate selection of PCM according to local climate conditions in combination with better ventilation design could reduce the hours of Discomfort Index by up to 32% and 29% in moderate and severe ranges respectively. But these figures were reduced to 7 % and 10 % for PCM enabled building without night ventilation. In conclusion, it is foreseeable that PCM with suitable phase transition properties would have potential for minimizing the effect of heat waves, on the occupant health and comfort in Australian residential buildings. However, proper building design is critical for the effective use of phase change materials.