We demonstrate the generation of water-in-water (w/w) jets and emulsions by combining droplet microfluidics and aqueous two-phase systems (ATPS). The application of ATPS in microfluidics has been hampered by the low interfacial tension between typical aqueous phases. The low tension makes it difficult to form w/w droplets with conventional droplet microfluidic approaches. We show that by mechanically perturbing a stable w/w jet, w/w emulsions can be prepared in a controlled and reproducible fashion. We also characterize the encapsulation ability of w/w emulsions and demonstrate that their encapsulation efficiency can be significantly enhanced by inducing formation of precipitates and gels at the w/w interfaces. Our work suggests a biologically and environmentally friendly platform for droplet microfluidics and establishes the potential of w/w droplet microfluidics for encapsulation-related applications.