This review highlights the materials, mechanisms and applications of microencapsulation by interfacial polycondensation in different areas. This technology entraps active ingredients inside microcapsules/microspheres, having an average diameter ranging from nanosize to several 100 µ. Polycondensation reactions take place at the boundary of two phases to form the shells of microcapsules or matrix microspheres. The emulsion can be classified into three types: water-in-oil, oil-in-water and oil-in-oil. According to the hydrophilic-lipophilic property of core phase, different active substances, such as proteins, enzymes, insecticides, herbicides, vitamins, catalysts, drugs, essential oils, dyes and phase change materials, have been successfully incorporated into different microcapsules/microspheres. Based on the shell-forming materials, this technology is capable of preparing polyamine, polyurea, polyurethane, polythiourea, polyester, polyepoxide, polyacrylamide and polysiloxane microcapsules. Over the past two decades, microcapsules prepared by interfacial polycondensation have been widely used in carbonless paper, cosmetics, pharmacy, agriculture, energy storage/transfer, thermal insulation/regulation and information and magnetic recording.