The invention provides polyurethane microcapsules containing biocide, useful for preparing coating materials such as interior and exterior paints. Microcapsules described in this invention are prepared by dispersing biocide in an aliphatic hydrocarbon medium containing nonionic polymeric stabilizer having hydrophilic and hydrophobic repeating units, diol or polyol having molecular weight 200-2000, crosslinker and a catalyst selected from amino or organometallic compounds adding an isocyanate drop wise to this dispersion agitating the mixture at 800-1000 rotations per minute for the first 3-5 hours at 40-50 °C and then at 12-15 hours at 20-27 °C. to permit the formation of polyurethane microcapsules filtering and washing the microcapsules with lower aliphatic hydrocarbon and drying the microcapsules under vacuum at temperature between 20-35 °C.
