The objective of the study was to develop and characterize highly polyunsaturated flaxseed oil powder which could serve as a potential delivery system of omega-3 fatty acids in vegan diet. Three formulations of oil-in-water emulsions containing flaxseed oil (≥ 35% on dry basis), whey protein concentrate (WPC)/sodium caseinate (NaCas) and lactose were prepared, homogenized and spray dried for further physico-chemical analyses. Developed flaxseed oil powder was characterized for moisture content, water activity, particle size distribution, flowing characteristics, dissolution behavior, surface characteristics, oxidative stability and oil release behavior under simulated gastro-intestinal conditions. The results revealed that moisture content and water activity were in the range of 3–4% and 0.346–0.358, respectively, which is suitable for long term storage of powders. Particle size distribution profile showed poly-dispersed nature with mean droplet diameter (d4,3) in the range of 5.82 to 10.01 μm. Scanning electron micrograph of microcapsules showed spherical shapes without any apparent fissures on surfaces. Peroxide value (PV) indicated high oxidative stability of microencapsulated oil at the end of six months storage at room temperature (35 ± 1 °C). Prepared flaxseed oil powder was fortified (at 1% level) in market milk, which showed sensory characteristics comparable to control (p < 0.05) for up to 5 days of storage. It can be concluded that flaxseed oil could be stabilized at higher concentration which can also be used as a fortifying agent in milk for meeting the nutritional requirements of ω − 3 fatty acids in vegan and non-fish eating meat eaters' diet.