The increasing demand for natural pigments derived from microalgae results from their functional properties, colouring abilities and health-promoting benefits. Microalgae are now significant sources of commercially valuable naturally derived pigments including phycobiliproteins, chlorophyll, astaxanthin and carotenoids with applications across various industries. However, ensuring the stability of these pigments during use presents a significant challenge. Encapsulation techniques have emerged as a promising solution to address this issue by enhancing pigment stability and efficacy and enabling controlled release. Encapsulated pigment efficiency and stability depend on pigment dispersion forces, particle size, pigment density, viscosity and the encapsulation technique used. The recent studies have developed new encapsulation approaches to improve natural pigment stability.