There is a huge concern regarding the potential carcinogenic and mutagenic risks associated with the usage of synthetic chemicals as preservatives in various consumer products such as food and pharmaceutical formulations. In this aspect, there is a need for the development of alternative natural preservatives to replace these synthetic chemicals. More recently, naturally occurring essential oils have emerged as popular ingredients owing to their unique characteristics like antioxidant and antimicrobial activity, to enrich and enhance the functional properties of consumer products. However, due to their high volatility and hydrophobicity, their functionality is lost and their incorporation in aqueous products is challenging. One of the promising strategies to overcome this challenge is encapsulation which involves the entrapment of the essential oil inside a biocompatible material for its controlled release and increased bioavailability. Also, the choice of encapsulation method depends on the component to be encapsulated and the shell material. In this review, encapsulation in various colloidal systems that facilitate the potential delivery of essential oils is discussed. The focus is on encapsulation techniques along with their advantages and disadvantages, encapsulation efficiency, and in vitro release studies.