Urea formaldehyde was used as wall material and waterborne coatings as a core material to prepare microcapsules. So as to explore the influence of mass ratio of core to shell, reaction temperature and standing time on the performance of microcapsules, the orthogonal test of three factors and two levels was put into effect. The orthogonal experimental results showed the mass ratio of core to shell was the most important factor. With the increase of the mass ratio of core to shell, the output and clad ratio of microcapsules increased first and then decreased. The microcapsule with the mass ratio of core to shell of 0.67:1 had better appearance, output, and encapsulation performance. The optical properties of waterborne wood coating with the microcapsules of waterborne coating as core materials did not decrease significantly, while the hardness, impact resistance, and toughness were improved. At the same time, the microcapsules have a certain self-repairing effect on coating micro-cracks. Compared with the properties of waterborne coatings with other microcapsules, the coating with waterborne coating as core material has better comprehensive performance. The results provide a new research idea for the performance enhancement and self-healing of wood waterborne coating.