The concept and basic principle of microcapsule technology were expounded with the significance of microcapsules. The preparation methods of microcapsules were summarized including the principles, scopes of application and relative merits. The formation mechanism of microcapsules with chitosan as the main wall material was described, and the related factors affecting the preparation of microcapsules were reviewed. Finally, the prospects of the development of microcapsule technology in packaging industry were viewed, with the development direction in fine, high quality, environmentally friendly, cost-effective microcapsule indicated.