The work aims to improve the self-healing capability of cathodic electrophoretic coating subject to external damage. Microcapsules were prepared with melamine resin containing urea formaldehyde resin as shell material, and modified epoxy resin (KH-550) as core material by virtue of in situ polymerization. The microcapsules of good tolerance and small grain size were formed and added to the cathodic electrophoretic coating, so as to increase self-healing capability of the coating. The particle size and morphology of the microcapsules were characterized by means of polarizing microscope (PM) and scanning electron microscope (SEM). Hardness, adhesion, roughness and corrosion resistance of coating were evaluated by virtue of pencil hardness test, adhesion test, roughness test and salt spray test. The performance indices of bath solution as well as physical and mechanical properties of the coating were not affected when microcapsules were added to the cathodic electrophoretic coating. Roughness of the coating increased from 0.174 to 0.201, corrosion resistance at the cross was better than that of ordinary paint film after NSS 1000 h test on standard phosphating plate. Self healing ability of the coating subject to external damage can be increased effectively provided that cathodic electrophoretic coating is added to microcapsules prepared with melamine resin containing urea formaldehyde resin as shell material and modified epoxy resin (KH-550) as core material.