We will describe the creation of container-within-container structures, where one type of self-assembled container, i.e., vesicles, are encapsulated in a second larger container, i.e., biopolymer capsules. The capsules are formed by contacting drops of chitosan, a cationic biopolymer, with an anionic biopolymer such as gellan or gelatin. Assembly into spherical capsules is achieved by electrostatic interactions between oppositely charged polymers at the interface of the drop. Vesicles can be encapsulated in the capsules by simply mixing them with the initial chitosan solution prior to capsule formation. By packaging calcein, a hydrophilic dye, within the vesicles, an extended release of dye is achieved when compared to capsules containing no vesicles. This difference between vesicle-containing capsules and control capsules is significantly enhanced when a hydrophobically modified chitosan is used. Also, we explore the targetability of these capsules by (1) attaching anti-mouse antibodies to the capsule surface and (2) by dispersing magnetic g-Fe₃O₄ nanoparticles within the interior of the capsules. In vitro cell culture cytotoxicity studies by MTT assay show that the capsules are biocompatible with a variety of murine cell lines.