In a previous paper [Polymer (2003) in press DOI: 10.1016/j.polymer.2003.09.037] polymeric temperature-sensitive microgels were prepared by surfactant-free emulsion co-polymerization of N-vinylcaprolactam (VCL) and acetoacetoxyethyl methacrylate (AAEM). In the present work, VCL/AAEM microgels were used as a template for oxidative polymerization of pyrrole (Py). It was found that pyrrole polymerization takes place directly in microgel structure leading to composite particles. Influence of microgel structure and amount of incorporated polypyrrole (PPy) on particle properties is discussed. Obtained stable composite microgels show similar thermal sensitivity as VCL/AAEM particles with fully reversible collapse-swelling properties. (C) 2003 Elsevier Ltd. All rights reserved.