The lipid extract from shrimp cephalothorax (LES) is a potential functional food ingredient because of its astaxanthin, -tocopherol and polyunsaturated fatty acid content. This work aims at evaluating its bioactive (anti-inflammatory and antioxidant) and technological (potential for aqueous food applications) functionalities. The LES was encapsulated by spray-drying, obtaining a powder that was readily soluble in water, the resulting solution presenting an attractive reddish color, contrary to nonencapsulated LES. Encapsulated LES exerted anti-inflammatory activity at concentrations ≥100 µg/mL, as well as lipophilic and hydrophilic antioxidant activity. On the contrary, non-encapsulated LES did not show any of these bioactivities when dissolved in water. Irrespective of processing temperature (20 °C/100 °C) or refrigerated storage time (up to 6 days at 5 ºC ± 1 ºC), the color, astaxanthin content, 2 and fatty acid composition of encapsulated LES were relatively stable. Gelatin gels and films containing the emulsified or encapsulated LES had a homogeneous reddish color, as well as minor physicochemical modifications (viscoelastic properties, gel strength, film water solubility, and water vapor permeability). Furthermore, encapsulation process increased the bioaccesibility of astaxanthin up to 100%, in comparison with non-emulsified LES-added samples. In conclusion, spray-dried encapsulated LES is a promising functional food ingredient, especially for aqueous applications.