Propranolol-HCl, a water soluble drug, was bound to Indion 254 (R), a cation exchange resin, and the resulting resinate was microencapsulated with polystyrene using an oil-in-water emulsion-solvent evaporation method with a view to achieve prolonged drug release in simulated gastric and intestinal fluid. The effect of various formulation parameters on the characteristics of the microcapsules was studied. The diameter of the resinate-loaded polystyrene microcapsules increased with increase in the concentration of emulsion stabilizer and coat/core ratio and decreased with increase in the volume of organic disperse phase. The variation in the size of the microcapsules appeared to be related with the inter-facial viscosity which was influenced by the viscosity of both the aqueous dispersion medium and the organic disperse phase. The resinate encapsulation efficiency and hence the drug entrapment efficiency of the microcapsules increased with increase in the concentration of emulsion stabilizer and coat/core ratio and decreased with increase in the volume of organic disperse phase. These characteristics were found to depend on the extent of formation of fractured microcapsules and subsequent partitioning of the resinate into the aqueous dispersion medium. The degree of fracture on the microcapsules depended on the viscosity of the aqueous dispersion medium and the organic disperse phase. The uncoated resinate discharged the drug quite rapidly following the typical particle diffusion process. Although the desorption of the drug from the resinate was independent of pH of the dissolution media, increase in ionic strength increased the drug desorption. On the other hand, release of drug from the coated resinate was considerably prolonged and followed a diffusion controlled model. The prolongation of drug release was dependent on the uniformity of coating which was influenced by the formulation parameters. The drug release from the microcapsules was also found to be independent of pH of the dissolution media and increased with increase in ionic strength. The pH-independent release of the drug from both die uncoated and microencapsulated resinate was due to pH-independent solubility of the drug and high equilibrium concentration of the resinate in both the dissolution media. Polystyrene appeared to be a suitable polymer to provide prolonged release of propranolol independent of pH of the dissolution media.