A novel adhesive formed in situ in a microcapsule and method for forming such a pressure sensitive or flowable adhesive in situ in a microcapsule is disclosed. The method for forming the novel adhesive comprises providing an aqueous mixture of wall material in water; adding a substantially water insoluble core material, free radical initiator, and a solvent for the pre-polymers to the aqueous mixture. The core material comprises a first addition polymerizable pre-polymer having a Tg of less than about 0° C., a flash point of at least 75° C., and a boiling point of at least 175° C. These are typically selected from acrylate or methacrylate type materials. Optionally included is a second addition polymerizable pre-polymer for providing cross-linking or interaction between polymer chains. High shear agitation is provided to the aqueous mixture to achieve a particle size of about 0.1 to 250 microns. Stirring at a first temperature effects capsule wall formation; and heating to a second temperature polymerizes the pre-polymers of the core material to form an adhesive in situ in the formed capsules.