Polyurethane-polystyrene-grafted interpenetrating polymer networks (IPNs) were prepared in the presence of a soluble microgel. The objective was to understand the effect of the microgel on the physical and mechanical properties of the IPN systems. Three types of microgels were prepared by the condensation reaction of various amounts of tolylene diisocyanate (TDI) with linear polystyrene containing hydroxyl groups. The structure of the microgel was determined by gel permeation chromatography and intrinsic viscosity measurement. Increasing the amount of TDI resulted in a microgel having a more compact structure. The dynamic mechanical behavior, mechanical properties, densities, and swelling ratios of the IPNs were determined. Only one broad T(g) was observed in each of the dynamic mechanical spectra of the IPNs, whether the IPNs were prepared from microgel or not. This is because of increased compatibility of the two networks by the grafting reaction. Using a microgel to prepare IPNs could further improve the degree of network interpenetration. In addition, higher tensile strength and elongation at break were obtained for the IPNs, when the proper structure of the microgel was used. (C) 1993 John Wiley & Sons, Inc.