Functional food compounds with physiological activity are unstable against light, heat, oxygen and so on. Microencapsulation with wall materials and emulsifier is an important technique to form functional food and flavor powders in the food industry to prolong the shelf life of functional oils and flavors. Encapsulation techniques are classified into three methods: physical methods (spray drying, freeze-dr ying, extrusion, and crystal transformation), chemical methods (molecular inclusion, and coacervation) and bacterial cell methods (yeast and other cells). Among the various encapsulation techniques, spray dr ying is cost-ef fective since the product can be obtained continuously in a one-step operation. One of the key steps in the spray dr ying technique is emulsion preparation, which has a marked influence on the surface-oil content in the powder. Molecular inclusion with cyclodextrins (CDs) is also useful method to encapsulate hydrophobic functional food compounds such as polyunsaturated acids in CD cavity. In this paper, the encapsulation of functional lipids was discussed in the ef fect of oildroplet diameter and par ticle diameter on the stability of functional lipids. Molecular inclusion was reviewed about the formation of flavor and a gas such as 1-methylcyclopropene.