The tremendous progress witnessed in the field of biotechnology with respect to discovery of therapeutic and antigenic proteins has propelled the need for development of suitable oral delivery devices for these and other macromolecules. In this study, we report the encapsulation of fluorescein isothiocyanate (FITC)-labeled gelatin nanoparticles into poly(epsilon-caprolactone) (PCL) microsphere (nanoparticle-in-microsphere oral delivery system, NiMOS) by double emulsion like technique and the influence of variables such as polymer concentration in organic phase, amount of nanoparticles added as internal phase, and the speed of homogenization on particle size of NiMOS using a 3(3) randomized full factorial design. A statistical model with interaction terms was derived to predict the particle size of the hybrid system. The results from multiple linear regression analysis and Student's t-test revealed that for obtaining large particles of NiMOS, a high polymer concentration and low speed of homogenization was necessary. In contrast, to obtain particles of smaller size, high speed of homogenization was found to be very important. The mathematical model obtained was validated for prediction of particle size. The encapsulation of gelatin nanoparticles in PCL microsphere was confirmed by fluorescent microscopy. Based on the statistical model we were also successful in producing NiMOS of less than 10 mum in size, which could be used as oral delivery system for therapeutic and antigenic macromolecules.