Biocompatibility is of paramount importance for drug delivery, tumor labeling, and in vivo application of nanoscale bioprobes. Until now, biocompatible surface processing has typically relied on PEGylation and other surface coatings, which, however, cannot minimize clearance by macrophages or the renal system but may also increase the risk of chemical side effects. Cell membranes provide a generic and far more natural approach to the challenges of encapsulation and delivery in vivo. Here we harness for the first time living cells as "factories" to manufacture cell membrane capsules for encapsulation and delivery of drugs, nanoparticles, and other biolabels. Furthermore, we demonstrate that the built-in protein channels of the new capsules can be utilized for controlled release of encapsulated reagents.