Aqueous polyuethane (PU) colloids, like many other water-borne polymer colloids, have become an increasingly important class of materials in the surface coating industry. Three processing stages, the pre-dispersion, dispersion and postdispersion stages, are generally involved in the production of aqueous PU colloids. However, existing researches have neglected the importance of the dispersion stage. The present study aims to develop better understanding of the dispersion stage during the production of aqueous PU colloids. Non chain-extendable PU pre-polymer (PUp) is used to enable independent study of the dispersion stage and the phase inversion process is chosen due to its widespread industrial usage. Valid drop size characterisation techniques and phase inversion detection methods have been developed in this project. Three different dispersion regions have also been identified by changing the ionic group content of PUp. Each dispersion region is associated with a particular dispersion type. Those are (I) Stable aqueous emulsions that contain small PUp-in-water drops. They were produced using PUp with more than 0.2 mmole/g of ionic groups. (2) Aqueous PUp colloids with 0.05 ~ 0.2 mmole/g of ionic groups. These emulsions contain a mixture of drop structures, including simple drops and different multiple drops. (3) Aqueous PUp dispersions containing less than 0.05 mmole/g of ionic groups. These dispersions are not stable and the resultant dispersions separated when agitation was stopped. Modified phase inversion maps are introduced to represent the occurrence of all three dispersion regions. The modified phase inversion maps are partly analogous to those of conventional non-ionic-surfactant-water (nSOW) systems. The three dispersion regions have also been "reproduced" successfully using external surfactants as substitutes for the internal stabilising groups. A new catastrophic phase inversion mechanism is proposed to explain the existence of all three dispersion regions. Other variables studied during this project include different neutralising agents. different amount of carboxylic acid groups, operating temperatures and material addition rates. In conclusion, this project shows that the phase inversion process is a feasible route for producing aqueous polymer dispersions with little or no added external surfactants. Stable PUp-W dispersions can also be produced below the minimum ionic group content reported in existing literatures.