Interfacial polycondensation is an important polymerization technique that encapsulates a variety of active principles. Mechanisms governing the reaction and interplay of physical and chemical rate processes need to be understood for both rational design of reaction equipment and the process control to produce capsules with desired characteristics. A theoretical and experimental study of the process is reported here. Kinetic data were obtained over a range of concentrations, monomer mole ratios and polymer film thicknesses, using a technique that relies on the on-line measurement of pH as a function of time. To understand the mechanisms the reaction was slowed down by reducing the interfacial area. A minimum thickness of the polymer was observed to be necessary so that capsules preserve their integrity and do not break up. The theoretical model developed considers ionic equilibria in the aqueous phase and the resistance due to external mass transfer, diffusion through the polymer, and interfacial reaction. Under the conditions chosen, the resistance due to the chemical reaction is generally more dominant. Values of rate parameters were determined by fitting the model to the experimental data. Observed variations in the diffusivity between different experiments were rationalized through a study of the crystalline structure of polymers.