We report the synthesis of controlled sized Urea-Formaldehyde (UF) microcapsules containing an epoxy healing agent via in situ emulsification polymerization for the study of self-healing epoxy systems. Scanning Electron Microscopy (SEM) confirmed that the capsules possessed rough external surface which enhanced mechanical interlocking. Differential Scanning Calorimetry (DSC), Thermogravimetric Analysis (TGA) and Solid-state Nuclear Magnetic Resonance (NMR) spectroscopy were employed so as to determine the capsules thermal stability and decompositions and encapsulated healing agent percentage. To our knowledge it is the first time the solid-state NMR is used for the estimation of encapsulated healing agent. The obtained results clearly indicated that with decreasing capsule size, capsules remained thermally stable at high temperatures (approximetly up to 230 °C). Additionally, capsule size is for the first time directly correlated to both healing efficiency and the reduction of mechanical performance after self-healing system incorporation. Healing efficiency is proportional to capsule size with larger capsules resulting in 68% maximum load recovery. However, smaller capsules result to lower reduction of properties, i.e. 7% as oppose to 18% for larger ones. Although healing efficiency can be enhanced through the use of relatively large capsules, this is in expense of mechanical performance, i.e. there is an optimal capsule size.