Composite coatings, the product of electrolytic codeposition of solid particles in a metallic matrix have been developed and utilized in industry as wear resistant coatings. The work described in this paper concerns the development of water-containing metallic coatings prepared by the electrolytic codeposition of water-containing microcapsules from nickel Watts plating baths under pulse reversed current conditions. The water-containing polystyrene microcapsules employed in the codeposition experiments were produced by the complex emulsion/solvent evaporation technique. The influence of the use of two types of stabilizers on the size and the surface chemistry of the microcapsules is discussed. The microcapsules prepared in both cases are rigid spheres with compact walls and a smooth surface. The different stabilizers showed a significant influence on the dispersability of the capsules in the plating solution and their codeposition behaviour. The codeposition experiments carried out with the use of a rotating disc electrode revealed the influence of the plating parameters on the incorporation procedure and on the quality of the composite electrodeposits.