Microcapsule is a tiny sphere including core material/internal phase or fill, coated with/surrounded by wall know as shell, coating or membrane. The usual size range of the microcapsule lies between 1 to 1000 μm. The technique is usually applied for targeted drug delivery, protection of the molecule and stability if the core material. Microencapsulation system offers potential advantages over conventional drug delivery systems and also established as unique carrier systems for many pharmaceuticals. This article contains the traditional and the recent pharmaceutical applications of microecapsules. The microcapsules are widely applied in pharmaceutical for Novel drug Delivery System (NDDS), latest formulations, Delivery of DNA Vaccines, Pro Drug Approach, Biodegradable and biocompatible material. Other then pharmaceutical microcapsules are widely used in delivery of probiotic, pesticide industry, food technology, beverages and cell immobilization etc. Although significant advances have been made in the field of microencapsulation, still many challenges need to be rectified during the appropriate selection of core materials, coating materials and process techniques.