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In this study, a new and efficient dielectric–metal–dielectric-based thin-film encapsulation (DMD-TFE) with an inserted Ag thin film is proposed to guarantee the reliability of flexible displays by improving the barrier properties, mechanical flexibility, and heat dissipation, which are considered to be essential requirements for organic light-emitting diode (OLED) encapsulation. The DMD-TFE, which is composed of Al2O3, Ag, and a silica nanoparticle-embedded sol–gel hybrid nanocomposite, shows a water vapor transmission rate of 8.70 × 10–6g/m2/day and good mechanical reliability at a bending radius of 30 mm, corresponding to 0.41% strain for 1000 bending cycles. The electrical performance of a thin-film encapsulated phosphorescent organic light-emitting diode (PHOLED) was identical to that of a glass-lid encapsulated PHOLED. The operational lifetimes of the thin-film encapsulated and glass-lid encapsulated PHOLEDs are 832 and 754 h, respectively. After 80 days, the thin-film encapsulated PHOLED did not show performance degradation or dark spots on the cell image in a shelf-lifetime test. Finally, the difference in lifetime of the OLED devices in relation to the presence and thickness of a Ag film was analyzed by applying various TFE structures to fluorescent organic light-emitting diodes (FOLEDs) that could generate high amounts of heat. To demonstrate the difference in heat dissipation effect among the TFE structures, the saturated temperatures of the encapsulated FOLEDs were measured from the back side surface of the glass substrate, and were found to be 67.78, 65.12, 60.44, and 39.67 °C after all encapsulated FOLEDs were operated at an initial luminance of 10 000 cd/m2for sufficient heat generation. Furthermore, the operational lifetime tests of the encapsulated FOLED devices showed results that were consistent with the measurements of real-time temperature profiles taken with an infrared camera. A multifunctional hybrid thin-film encapsulation based on a dielectric–metal–dielectric structure was thus effectively designed considering the transmittance, gas-permeation barrier properties, flexibility, and heat dissipation effect by exploiting the advantages of each separate layer.