Microcapsule technology is introduced from types of microcapsule wall materials and core materials and the effects of microcapsules in this article. Several main preparation methods of microcapsules applied in dyeing and finishing, such as interfacial polymerization, in-situ polymerization, water phase separation, oil phase separation and molecular embedding method, are briefly introduced. In the end, the application of microcapsules is introduced by the view of dyeing, printing, protective functional finishing and health care functional finishing.