Oil-chitosan composite spheres were synthesized by encapsulation of sunflower seed oil in chitosan droplets, dropping into NaOH solution and in situ solidification. Hydrophilic materials (i.e., iron oxide nanoparticles) and lipophilic materials (i.e., rhodamine B or epirubicin) could be encapsulated simultaneously in the spheres in a one step process. The diameters of the prepared spheres were 2.48 ± 0.11 mm (pure chitosan spheres), 2.31 ± 0.08 mm (oil-chitosan composites), 1.49 ± 0.15 mm (iron-oxide embedded oil-chitosan composites), and 1.69 ± 0.1 mm (epirubicin and iron oxide encapsulated oil-chitosan composites), respectively. Due to their superparamagnetic properties, the iron-oxide embedded oil-chitosan composites could be guided by a magnet. A lipophilic drug (epirubicin) could be loaded in the spheres with encapsulation rate measured to be 72.25%. The lipophilic fluorescent dye rhodamine B was also loadable in the spheres with red fluorescence being observed under a fluorescence microscope. We have developed a novel approach to an in situ process for fabricating oil-chitosan composite spheres with dual encapsulation properties, which are potential multifunctional drug carriers.