The objective of the study was to develop and characterize omega-3 dahi (Indian yoghurt) through fortification of microencapsulated flaxseed oil powder (MFOP). Four different formulations of MFOP were fortified in dahi @ 1, 2 and 3 % levels and the level of addition was optimized on the basis of sensory scores. Dahi fortified at 2 % level was observed comparable to control, which was further studied for titratable acidity, syneresis, firmness, stickiness, oxidative stability (peroxide value), α-linolenic acid (ALA, ω-3) content and sensory attributes during 15d of storage. MFOP fortified dahi showed significantly (p < 0.05) higher acidity and percent syneresis after 12d of storage. However, peroxide value remained well below (~0.41) to the maximum permissible limit (5 meq peroxides/kg oil) prescribed by Codex Alimentarius Commission (1999). Gas-liquid chromatography profile showed~21 % decrease in ALA content in fortified dahi after 15d of storage. Overall, it can be concluded that flaxseed oil microcapsules could be successfully incorporated in dahi; which could serve as a potential delivery system of omega-3 fatty acids.