This article presents an on-demand, multi-step synthesis scheme that is capable of forming semi-permeable micro-capsules on an integrated microfluidic system. Emulsion droplets functioning as templates and reactors are employed to realize the synthesis process. Threelayered PDMS micro-devices with pneumatically actuated diaphragm valves constructed on top of specially designed fluidic-channels are utilized to control the droplets and, consequently, the encapsulation process. A PDMS molding and bonding process is used to fabricate the proposed microfluidic devices. In the prototype demonstration, relatively small Na-alginate droplets are metered, trapped, and then drawn into relatively large CaCl 2 droplets, while they react and form solid Ca-alginate micro-capsules on the interfaces. In addition, entrapment and transfer of the resulting capsules can also be performed on the same microfluidic system to further process Ca-alginate into semi-permeable alginate-poly-L-lysine (PLL). It has been demonstrated that: (1) both emulsion droplets and solid capsules could be manipulated; (2) multi-step reactions could be performed on droplet-in-droplet interfaces to synthesize alginate-PLL capsules; and (3) on demand, controlled encapsulation could be achieved on an integrated microfluidic system. As such, the demonstrated multi-step synthesis scheme could potentially fulfill the real-time controllability on micro-encapsulation, which is desired for a variety of biological and medical applications.