Delivery systems are needed to protect carotenoids in foods, but release them at an appropriate location within the gastrointestinal tract (GIT). In this study, β-carotene was incorporated into three different delivery systems: free lipid droplets; filled hydrogel beads formed using 0.5% alginate (“0.5% beads”); and, filled hydrogel beads formed using 1% alginate (“1% beads”). Hydrogel beads were fabricated by injecting an alginate solution into a calcium ion solution using an extrusion device (Encapsulator). Light scattering and confocal microscopy measurements indicated that the 0.5% beads had much smaller diameter (285 μm) than the 1% beads (660 μm). β-carotene encapsulated in free lipid droplets (nanoemulsions) was highly unstable to chemical degradation when stored at elevated temperatures. Conversely, incorporation of the β-carotene-loaded lipid droplets into hydrogel beads greatly improved its chemical stability. Simulated GIT studies indicated that the rate and extent of lipid digestion decreased in the following order: free lipid droplets >0.5% beads >1% beads. The encapsulated β-carotene had a higher bioaccessibility in free lipid droplets than in hydrogel beads, whereas its chemical stability within the GIT was higher in the hydrogel beads, with the 1% beads giving better protection against degradation than the 0.5% beads, which was attributed to differences in hydrogel pore size. Overall, our results provide valuable information for the rational design and development of nutraceutical delivery systems for utilization in functional food products.