The consumption of omega-3 fatty acids provides a wide range of health benefits. However, the incorporation of these fatty acids in foods is limited because of their high oxidative instability. A new paradigm has emerged to better explain the oxidation mechanism of polyunsaturated fatty acids, which will be discussed here with reference to bulk lipids considered a special case of water in oil microemulsion. This paradigm suggests that lipid oxidation reactions are initiated by heterogeneous catalysis by metal oxides followed by the formation of micelles containing initial hydroperoxides, water, and other amphiphilic compounds. The induction period comes to the end when the formed micelles reach a critical micelle concentration and start to decompose opening the way to intense free radical reactions. Antioxidants and synergists extend the induction period not only by scavenging free radicals but also by stabilizing the micelles. With better understanding of the lipid oxidation mechanism, a tailored choice of antioxidants and synergistic combinations, and efficient encapsulation methods may be optimized to provide stable encapsulates containing highly n-3 polyunsaturated fatty acids. Smart processing and encapsulation technologies utilizing properly stabilized oils as well as optimized packaging parameters aiming to enhance n-3 fatty acid stability by smart selection/design of antioxidants, control of the interfacial physics and chemistry, and elimination of surface oil are needed for this purpose.