Novel self-repairing Urea-Phenol-Formaldehyde (UPF) microcapsules containing linseed oil were prepared via in-situ polymerization in an oil-in-water emulsion. The main purpose of encapsulation is to control the release of linseed oil, when external conditions such as mechanical stress or energy cause microcapsules to break. These controlled release mechanisms of linseed oil make them suitable for application in self-healing coatings. Chemical structure analyses of microcapsules were studied by Fourier transform infrared spectroscopy (FTIR), optical microscopy and scanning electron microscopy for their structural & morphological illustrations. Controllable particle sizes were determined under optical microscope and as well using particle size analyzer. To determine the healing efficiency, the microcapsules, were incorporated in the epoxy coatings in varying proportions. The effects of the same on anti-corrosion performance was carried out in 5% NaCl aqueous solution (ASTM B117) and Decreasing trend of pencil hardness, scratch hardness, Impact resistance with the increase in concentration of microcapsules was observed. Chemical resistance could also be attributed to the presence of aromatic structures in epoxy which impart chemical stability. Secondary hydroxyl moiety in epoxy chain forms hydrogen bonding with the metal substrate that would contribute to good adhesive forces. Epoxy coatings incorporated with microcapsules showed better corrosion resistance than neat epoxy coating, where neat epoxy coating showed rust and spreading of rust observed on tested panel. Mechanical properties decreased on incorporating microcapsules into epoxy matrix, hence development of mechanical properties without effecting the corrosion properties shall be studied further.