The phase separation mechanism in semidilute aqueous poly(N-isopropylacrylamide) (PNIPAM) solutions is investigated with small-angle neutron scattering (SANS). The nature of the phase transition is probed in static SANS measurements and with time-dependent SANS measurements after a temperature jump. The observed critical exponents of the phase transition describing the temperature dependence of the Ornstein-Zernike amplitude and correlation length are smaller than values from mean-field theory. Time-dependent SANS measurements show that the specific surface decreases with increasing time after a temperature jump above the phase transition. Thus, the formation of additional hydrogen bonds in the collapsed state is a kinetic effect: A certain fraction of water remains as bound water in the system. Moreover, H-D exchange reactions observed in PNIPAM have to be taken into account.