Encapsulation remains a fundamental and consistent approach of fabrication of drug and diagnostic delivery systems in the health space and natural polymers such as polysaccharides and proteins continue to play significant roles. Micro- or nanoencapsulation is employed for the conventional pharmaceuticals, biopharmaceuticals, or biologics, bioactives from natural sources and diagnostics such as biomarkers. The outcome of any encapsulation depends on the technique employed and the encapsulating material. The encapsulating materials employed influence the physical and chemical attributes of the fabricated micro- and nanocapsules. The encapsulating materials could be natural or synthetic, however, natural polymers are preferred because they are human and environmentally friendly. Polysaccharides and proteins are abundant in nature, biogenic, biocompatible, biodegradable and possess biological functions making them materials of choice for encapsulation of drugs and diagnostics. This chapter reviews the recent and advanced applications of polysaccharides and proteins as nanocarrier materials for micro- and nanoencapsulation of therapeutics and diagnostics.