A new approach to MRI thermometry using encapsulated hyperpolarized xenon is demonstrated. The method is based on the temperature dependent chemical shift of hyperpolarized xenon in a cryptophane-A cage. This shift is linear with a slope of 0.29 ppm °C−1 which is perceptibly higher than the shift of the proton resonance frequency of water (ca. 0.01 ppm °C−1) that is currently used for MRI thermometry. Using spectroscopic imaging techniques, we collected temperature maps of a phantom sample that could discriminate by direct NMR detection between temperature differences of 0.1 °C at a sensor concentration of 150 μM. Alternatively, the xenon-in-cage chemical shift was determined by indirect detection using saturation transfer techniques (Hyper-CEST) that allow detection of nanomolar agent concentrations. Thermometry based on hyperpolarized xenon sensors improves the accuracy of currently available MRI thermometry methods, potentially giving rise to biomedical applications of biosensors functionalized for binding to specific target molecules.