The microencapsulation of cajuput oil by spray drying was investigated with respect to the effects of two kinds of matrices (gum arabic and modified starch) as well as to the effects of initial concentrations of cajuput oil on its retention and stability. The results indicated that the oil retention depended on the type of encapsulating agent. Hicap100 showed higher oil retention of encapsulated cajuput oil. Further, the surface oil content of the Hicap100 powder was very low. The protective effect of microencapsulation of Hicap100 was also studied. The functional compound, 1,8-cineole, was released more slowly from the Hicap100 compared to gum arabic, especially at the level of 30% oil loaded.