Composite coatings consisting of a metal matrix in which ceramic particles are embedded have recently been developed and used in industry as wear-resistant coatings. The present paper deals with the development of oil-containing self-lubricating metallic coatings. These have been produced by electrolytic codeposition of oil-containing microcapsules from Watts nickel plating baths. For this purpose, oil-containing polyterephthalamide microcapsules were synthesized based on the interfacial polymerization of an oil-soluble monomer (terephthaloyl dichloride) and a mixture of two water-soluble monomers (diethylenetriamine and 1,6-hexamethylenediamine). The influence of several synthesis parameters (e.g. type of encapsulated organic phase, monomer concentration(s) and concentration ratio of the two amine monomers) on the size distribution and morphology of the oil-containing polyamide microcapsules as well as on their electrolytic codeposition behaviour is discussed. As revealed by scanning electron microscopy analysis, the morphological characteristics of the microcapsules were affected to a great extent by the functionality of the water-soluble amine monomer. Furthermore, the composition of the core material of the microcapsules showed a marked influence on their stability upon aging in the Watts nickel plating bath. Finally, codeposition experiments using a laboratory rotating electrode showed that the level of codeposition was influenced by the presence of additives in the nickel electrolyte and was strongly dependent on the polymerization conditions employed in the microcapsule synthesis.