Microscopic water-in-oil droplets are a versatile chemical and biological platform whose dimensions result in short reaction times and require minuscule amounts of reagent. Methods exist for the production of droplets, though the vast majority are only able to do so in continuous flows, restricting the ability to independently control reactions of individual droplets, a prerequisite for programmable digital microfluidics. Here we present a novel method to produce individual picoliter-scale droplets on-demand using surface acoustic waves (SAW). Acoustic forces arising from SAW act on the oil-water interface, creating a droplet whose volume is defined by the applied power, duration of the force and system geometry. Additionally, this method is able to pre-concentrate particles simultaneously with droplet production, meaning that particles and cells, even if in a dilute mixture, can be easily encapsulated. Our method is expected to be applicable to high-throughput screening, bioreactor creation and other microfluidic processes.