Two-phase polymerization of acrylamide (AM) has been successfully carried out in aqueous poly(ethylene glycol) (PEG) solution with 2,2'-azobis[2-(2-imidazolin-2-yl)propane] dihydrochloride (AIBI) as the initiator. A new heterogeneous kinetic model has been developed based on the partitioning of components between the two phases. It was found that polymerization proceeded in both the continuous and dispersed phases, even though the latter was the dominating polymerization locus. Besides the initiator, monomer concentration, and polymerization temperature, the PEG concentration also significantly influences the polymerization rate. With increasing concentration of PEG, gel effects in the aqueous PAM droplets were enhanced and more monomer preferred to polymerize inside the droplets, hence, the polymerization kinetics accelerated. The proposed model can successfully predict the composition of each phase and the polymerization kinetics during the aqueous two-phase polymerization over a wide range of various reactions conditions. (C) 2010 American Institute of Chemical Engineers AIChE J, 57: 2493-2504, 2011