An ammonolysis-based microencapsulation technique useful for the preparation of biodegradable microspheres s described in this study. A dispersed phase consisting of poly-D,L-lactide-co-glycolide, progesterone, and methyl chloroacetate was emulsified in an aqueous phase. Upon addition of ammonia solution, the emulsion droplets were quickly transformed into poly-D,L-lactide-co-glycolide microspheres laden with progesterone. Rapid solvent removal was accompanied by ammonolysis. The chemical reaction converted water-immiscible methyl chloroacetate to water-miscible chloroacetamide and methanol. Chloroacetamide formation was proved by 1H NMR and ESI-MS studies. Thermogravimetric analysis showed that the microspheres contained only small amounts of residual methyl chloroacetate. Incorporation efficiencies of progesterone ranged from 64.3 ± 1.1 to 72.8 ± 0.3%, depending upon microsphere formulations. X-ray powder diffractometry analysis substantiated that no polymorphic transition of progesterone occurred during microencapsulation. To evaluate the feasibility of this new method against the commonly used microencapsulation method, microspheres were also prepared by a typical dichloromethane-based solvent evaporation process. The important attributes of microspheres prepared from both methods were characterized for comparison. The new ammonolysis-based microencapsulation process showed interesting features distinct from those of the solvent evaporation process. The microencapsulation pro ss reported in this study might be applicable in loading pharmaceuticals into various polymeric microspheres.