We describe the synthesis and characterization of ultrafine TiO2 particles (in both anatase as well as rutile form) produced by a chemical reaction within the aqueous core of a water-in-oil microemulsion. The microemulsion was stabilized and the Ti4+ ions provided by a functionalized surfactant derived from the commercially available Aerosol-OT, i.e., sodium bis (2-ethylhexyl) sulfosuccinate (Na-DEHSS). The Na+ ions in Aerosol-OT were completely replaced by Ti4+ through an ion-exchange reaction in nonaqueous solvents. Ultrafine TiO2 particles were produced by the hydrolysis of the Ti-containing surfactant in the water droplets. The dependence of the size of the precipitated TiO2 · xH2O particles on various structure parameters of the microemulsion was studied in detail.