3-iodo-2^?ropynyl butyl carbamate (IPBC) was encapsulated by in situ polymerization of urea formaldehyde resin of crosslink (formaldehyde : urea) ratios 1 and 2. The kaching rate of the microcapsuks was reduced compared to the free fungicide. Microcapsuks prepared at the higher urea formaldehyde crosslink ratio gave a lower kaching rate. Two concentrations based on the weight of the active ingredient per volume of paint (a.i./v) of 0.3 % and 1 % of microcapsuks or free IPBC were incorporated into exterior latex paint and applied onto rubberwood panels. The panels were then exposed to the environment A longer protection from discoloration was provided by the encapsulated IPBC of 1% concentration.