Recent developments in multimodal imaging and image-guided therapy requires multilayered microparticles that encapsulate several imaging and therapeutic agents in the same carrier. However, commonly used microencapsulation processes have multiple limitations such as low encapsulation efficiency and loss of bioactivity for the encapsulated biological cargos. To overcome these limitations, we have carried out both experimental and theoretical studies on coaxial electrospray of multilayered microparticles. On the experimental side, an improved coaxial electrospray setup has been developed. A customized coaxial needle assembly combined with two ring electrodes has been used to enhance the stability of the cone and widen the process parameter range of the stable cone-jet mode. With this assembly, we have obtained poly(lactide-co-glycolide) microparticles with fine morphology and uniform size distribution. On the theoretical side, an instability analysis of the coaxial electrified jet has been performed based on the experimental parameters. The effects of process parameters on the formation of different unstable modes have been studied. The reported experimental and theoretical research represents a significant step toward quantitative control and optimization of the coaxial electrospray process for microencapsulation of multiple drugs and imaging agents in multimodal imaging and image-guided therapy.