The bulk polymerization of styrene initiated by epsilon-caprolactam (CL) and n-dodecyl mercaptan (RSH) has been explored. This novel polymerization system shows living characteristics. For example, the molecular weight of the resulting polymers increases with conversion, and the system has the ability to form diblock copolymers and so forth. The polymer chain end contains thiol and lactam structures, which we have investigated with Fourier transform infrared, H-1 NMR, and C-13 NMR techniques. Electron spin resonance spectra and theoretical calculations by the Hartree-Fock methods have been used to examine the mechanism. The results reveal that the initial polymerization starts from thiol via a chain-transfer reaction, and the propagation proceeds by the insertion of a monomer between the terminal group and the intermediate structure of lactam. Finally, the polymerization kinetics have been examined. The polymerization rate varies linearly with the concentration of CL and RSH, and this confirms the mechanism. (C) 2004 Wiley Periodicals, Inc.