A modeling approach is developed to account for the important effects of intermicellar exchange on the ultrafine particle formation in reverse micelles. A set of fusion-fission schemes is specifically proposed and used for modeling intermicellar metal exchange. The dynamic effects largely differing in their time scales are decoupled using a two-staged approach. Growth of metal particles is simulated to occur through intramicellar attachment of free metal atoms from an instantaneous reduction reaction and as well as by transfer and attachment through intermicellar exchange. Simulation results predict increase in particle size with aqueous core size and total aqueous phase volume, increase in particle number density with surfactant concentration at fixed aqueous phase to surfactant molar ratio, a minimum in average particle size as a function of salt concentration, and increase in particle size polydispersity with salt concentration and aqueous core size. Low values of the order of 10(-1) are found for the number ratio of particles to micelles. All these effects have been observed experimentally. The mean core size and the critical metal nucleation number are found to be the primary influencing parameters for the final particle sizes. It is further found that the polydispersity can be controlled through proper choice of starting mixture conditions.