A light emitting device has a light emitting diode (LED) encapsulated by an encapsulant member. The encapsulant member includes a luminescent material, such as a phosphor, and a thermal insulating material. The thermal insulating material effectively insulates the luminescent material from the heat generated by the LED. A thermal conducting material is desirably placed in thermal contact with a back side of the LED to assist heat dissipation. The encapsulant member may be formed in two separate layers with the luminescent material forming a luminescent layer, and the thermal insulating material forming a thermal insulation layer disposed between the luminescent layer and the LED.