Heat, oxygen, moisture and light are the main causes of oxidation reactions in lipid containing foods. In particular, lipid oxidation is a major problem for unsaturated lipids. Until recent years, natural or synthetic antioxidants have been widely used in oils to retard oxidative deteriorations. Nowadays, encapsulation of oils like other sensitive materials such as vitamins, colorants, phenolic compounds or probiotic bacteria by various techniques have become increasingly popular as a promising preservation method. On the other hand, encapsulation improves handling properties of oils as well as protecting oils against oxidation. Spray drying is the most preferred encapsulation technique due to its lower operating costs and simplicity. Freeze–drying, coacervation and emulsification are the other well–known encapsulation methods. However, process parameters of these methods have extremely important effect on storage stability of encapsulated oils. As for encapsulated oils by drying, also the characteristics of powder products are greatly influenced by process variables. Many studies have been carried out to optimize process factors for encapsulation of oils with a maximum efficiency. In this review, common practices used for oil encapsulation and the oxidative stability of encapsulated oils are discussed in detail. Furthermore, effects of environmental conditions on storage stability of encapsulated oils during storage are also reviewed.