A solvent exchange method is employed to provide microencapsulated compositions, such as microcapsules of pharmaceutical preparations. The method is based on an exchange of water and a hydrophilic organic solvent, whereby a decline in solvent quality for the organic solvent causes a polymer dissolved therein to be deposited onto an aqueous core. Optimal results are rationalized in terms of a balance of water solubility and surface tension for the organic solvent. In a preferred embodiment, microcapsules of selected drugs are formed by contacting microdroplets of an aqueous solution containing the drug with the organic solvent containing a polymer dissolved therein. A preferred method employs biodegradable poly(lactic acid-co-glycolic acid) (PLGA) dissolved in acetic acid, ethyl acetate, methyl acetate, or ethyl formate, to form a PLGA membrane around an aqueous drug core. The method is particularly attractive for encapsulating protein-based drugs without substantial denaturation.