Multifunctional nanosized capsules have drawn intensive research interests during last several decades. Encapsulation of various active substances and controlled release under a certain external stimuli will enable the capsule materials a variety of applications such as drug delivery, cosmetic industry, corrosion protection and so on. This work will present the techniques we have used to develop the capsules. By carefully select the shell materials, the encapsulated substance could be released in a controlled way. A new concept which can be used to encapsulate oil-dissolved active agents for water based system was also developed. Dynamic light scattering and confocal microscope were used to characterize the particles. The results showed that the oil based active agents were successfully encapsulated in the aqueous polyelectrolyte capsules. The size of the capsules could vary from several 10 nm to several 100 nm, which is quite dependent on the concentration of the polyelectrolyte added. The obtained capsules (less than 100nm) show very narrow size distribution.