Preparation of polyesteramides-poly[(epsilon-caprolactam)-co-(epsilon-caprolactone)]s by anionic polymerization of epsilon-caprolactam in the presence of poly(epsilon-caprolactone) at 150 degreesC was studied in this paper. epsilon-Caprolactam magnesium bromide was used as an initiator of polymerization and polymeric materials containing 5-25 wt% epsilon-caprolactone units were obtained. Thermal methods (DSC and DMA) were employed for characterization of poly [(epsilon-caprolactam)-co-(epsilon-caprolactone)]s and their mechanical properties were also evaluated. By introducing the activator with N-acyllactam structure, the polymerization rate increased and it was possible to carry out the polymerization at 110 degreesC. Mechanical properties of polyesteramides were influenced by both the content of epsilon-caprolactone units incorporated into copolymer and polymerization temperature. The mechanism of incorporation of poly(epsilon-caprolactone) is discussed. The results show that it is not possible to restrict exchange transacylation reactions, progressing in the course of polymerization, by kinetic tools. (C) 2004 Elsevier Ltd. All rights reserved.