A new microencapsulation was established in which small microcapsules with a hydrophilic polymeric wall could be fabricated, capsulizing the water-soluble content. The new microencapsulation is based on an emulsion interfacial reaction technique that combines the characteristics of an interfacial reaction and conventional emulsion processes. In this technique, hydrophilic polymers [poly(vinyl alcohol) and chitosan] were used as the wall material of the microcapsules. The microencapsulation process was composed mainly of the following steps: preparation of a water/oil (w/o) emulsion 1 containing hydrophilic polymers and a water-soluble core material and w/o emulsion 2 containing a water-soluble crosslinking agent and catalyst; the formation of microcapsules by mixing emulsion 1 and emulsion 2; and washing and drying the formed microcapsules. In the new technique an insoluble polymer film was formed easily by the fast crosslinking reaction on the surface of tiny emulsified polymer solution particles in contact with the emulsified crosslinking agent solution particles under mixing with high speed agitation. Thereby, small stable microcapsules were formed. The emphasis in this study was on the establishment of the microencapsulation process by which microcapsules were formed and controlled. The microencapsulation was characterized by analysis of the size distribution of microcapsules fabricated with process conditions. The clarification of the effect of the preparation conditions was also made on the morphology and diameter of the microcapsules,