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I hear and use both (in the way and on the way), but I am not sure which one is perfect on which situation. Please help me to understand the difference between these two (in the way vs. on the way).

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up vote 3 down vote accepted

If the context is way, let me try to make it simple -

in the way would suggest some impediment, obstruction or the like
on the way refers to proceeding somewhere (and something coming) or on the way of journey

For instance,

"A tough guy was in the way not letting me pass through the corridor."
"Sure, why not? I'll meet Jane while going to my office. Her house is on the way."

Useful reading for in the way and on the way.

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