Polymeric capsules have attracted great interest as versatile carrier systems in the area of medicine and pharmaceutics. These capsules are made by stepwise layer-by-layer adsorption of polymers onto a template core, which can be removed to produce hollow capsules. The cavity of these capsules can host various cargo molecules while the capsules' wall can be functionalized towards desired properties by embedding specific moieties into the multilayers. Tuning of the capsules' properties influences their interaction with cells and tissues and paves the way towards the development of stimuli-responsive capsules releasing their payload at a target site. In this review, we describe the generation of tailored layer-by-layer capsules and focus hereby on numerous potential applications of this multifunctional delivery platform in biomedical settings. We review the current status in the field and discuss the opportunities, as well as the hurdles, to be overcome to successfully transfer this technology to therapeutic and diagnostic applications.