We present a study on the morphology and kinetics of depletion-induced phase separation in aqueous xanthan-colloid mixtures with light microscopy and small angle light scattering (SALS), using fluorinated colloids with a refractive index close to that of water to prevent complications of multiple scattering. Microscopy with the direction of observation perpendicular to gravity enabled us to observe the development of the microstructure during the entire phase separation process including the formation of a macroscopic interface. Bicontinuous structures typical of a spinodal decomposition mechanism were observed at early times. These structures coarsened in time until hydrodynamic flow resulted in lane formation. Close to the binodal, a nucleation-and-growth mechanism was observed with formation of droplets. The coarsening kinetics were studied in more detail with SALS and turbidity measurements. Above polysaccharide concentrations at which entanglements become dominant, a slower coarsening and macroscopic phase separation were found because of the high continuous phase viscosity.