Layer-by-layer assembled microcapsules have potential applications as delivery and biosensing systems, which make them attractive tools for use in various aspects of nanomedicine. We examined the effect of microcapsule location on activity of the bioluminescent enzyme luciferase in both intact capsules and following cell uptake. In intact capsules, the rate of reaction of luciferase was greatest for luciferase in the outer layer and least in the core. Following cell uptake, luciferase in the outer layer was rapidly reactive, and a similar rate of reaction and activity was observed for luciferase placed in capsule interior (core). By contrast, there was minimal activity detected when microcapsules with luciferase sandwiched between polyelectrolytes in a middle layer were delivered to cells. This study informs us of the availability of bioactive molecules located in different positions within microcapsules and will enable better microcapsule construction in line with the intended application, particularly delivery of functional proteins to cells.