In order to formulate a controlled release system for oral drug delivery, the microcapsules were prepared in w/o emulsion containing cefaclor as a water-soluble model drug by th e method of interfacial polycondensation. Gelatin wis selected as a suitable polymer for interfacial polycondensation. Gelatin solution containing drug was emulsified in an organic phase under mechanical stirring. After emulsification, terephthaloyl chloride was added as cross linking agent, followed by mechanical stirring, washing and drying. Physical characteristics of microcapsules were investigated by optical microscopy, scanning electron microscopy and particle size analysis. Mean particle sizes of gelatin microcapsules were, in the range, of about 20~50 ${mu}$m. The microcapsules were in good apperance with spherical shapes before washing, but were destroyed partially after washing and drying, even though some microcapsules were still maintained in their shapes. Contents of cefaclor in the microcapsules were calculated by UV spectrophotometry after 3 days extraction with pH 4 carbonate buffer solution. The effects of cross linking time. pH. concentration of cross-linking agent, and temperature on drug release kinetics have been discussed extensively.