During the drying of polymer shells formed by microencapsulation, vacuole formation is believed to occur as a result of phase separation. To better understand and control this process, we have used a multicomponent diffusion formalism to predict compositional changes in the layer as organic solvents diffuse out and water diffuses into the layer. Formation of thermodynamically unstable compositions can lead to phase separation by condensation of water on submicron foreign particles present in the shell wall. We used statistical mechanics, the UNIFAP methodology, and empirical data to deduce the required values of transport coefficients and equilibrium phase compositions. The results suggest that vacuole formation can be eliminated or reduced by removing submicron and larger particles from the shell wall and by using solvents with lower intrinsic water solubilities.