Horseradish peroxidase (HRP) holds great potential in wastewater treatment. However, its instability in harsh environments remains a major issue. Various immobilization technologies were developed to retain enzyme stability at the cost of its effectiveness. We demonstrate that zwitterionic encapsulation of HRP retained both protein stability and activity to a large degree. In a water treatment study, encapsulating HRP into a zwitterionic nanogel resulted in a three-fold increase in the catalytic oxidation efficiency of phenol molecules. In addition, zwitterionic nanocapsules exhibited the best performance when compared with nanocapsules made from other hydrophilic polymers. These results indicated that zwitterionic HRP nanocapsules hold great potential in the decontamination of organic pollutants from wastewater.