Biopolymeric chitosan is considered a promising encapsulating agent for textile applications due to its biocompatibility, lack of toxicity, antibacterial activity, high availability, and low cost. After cellulose, it is nature's most important organic compound. Also, chitosan has unique chemical properties due to its cationic charge in solution. Microencapsulation technologies play an important role in protecting the trapped material and in the durability of the effect, controlling the release rate. The application of chitosan microcapsules in textiles follows the current interest of industries in functionalization technologies that give different properties to products, such as aroma finish, insect repellency, antimicrobial activity, and thermal comfort. In this sense, methods of coacervation, ionic gelation, and LBL are presented for the production of chitosan-based microcapsules and methods of textile finishing that incorporate them are presented, bath exhaustion, filling, dry drying cure, spraying, immersion, and grafting chemical. Finally, current trends in the textile market are identified and guidance on future developments.