Polyurethane microcapsules containing functional oil (citronella oil) were successfully prepared by conventional interfacial polymerization of tolulene 2,4-diisocyanate (TDI) and ethylene glycol (EG) and characterized by Fourier transform (FT-IR) spectroscopy, Ultraviolet spectroscopy, particle size analysis, thermogravimetric analysis (TGA), and scanning electron microscopy (SEM). Tile effects of polymerization variables, such as surfactant concentration and agitation speed, on the particle size and particle size distribution were investigated. FT-IR spectroscopic data showed that citronella oil was successfully encapsulated in the microcapsule. Thermogravimetric analysis data showed that the microcapsule was thermally stable up to $220^{circ}C$. The controlled release of the citronella oil present in the microcapsule core in a methanol medium was demonstrated by ultraviolet spectroscopy showing that the amount of released citronella oil was increased with increasing time. It was observed that the amount of released citronella oil was increased with increasing stirring speed and emulsifier concentration in the rnicrocapsule preparation step. Polyurethane microcapsules containing citronella oil showed excellent anti-moth property.