Coatings are susceptible to cracking due to chemical exposure and mechanical forces. To enhance their durability and self-healing properties, microcapsules are utilized. In this study, poly(urea formaldehyde) microcapsules containing epoxidized palm oil as the core material were synthesized and investigated for their self-healing properties in diglycidyl ether of bisphenol A (DGEBA) epoxy resin. The epoxidation reaction of palm oil was carried out by varying reaction times and the molar ratio of hydrogen peroxide to formic acid to achieve an effective oxygen carrier with a high oxirane oxygen content. The formation of epoxide groups was confirmed using Fourier transform infrared spectroscopy (FT-IR) and Fourier transform Nuclear Magnetic Resonance Spectroscopy (NMR). The core-shell structure of the microcapsules was characterized using scanning electron microscopy (SEM) and energy dispersive X-ray spectroscopy (EDS). Pencil hardness and adhesion tests were conducted on the epoxy coatings containing different amounts of microcapsules to evaluate the impact of microcapsules on hardness and adhesion properties. The epoxy coatings with microcapsules demonstrated significant self-healing ability and provided effective anti-corrosive protection. Higher microcapsule contents resulted in improved self-healing performance. Furthermore, the addition of microcapsules at 5 to 15 wt % did not compromise the hardness and adhesion properties of the epoxy coating.