Encapsulated magnetic microdroplets are of paramount importance in drug targeting and therapeutic applications. However, conventional techniques for generating encapsulated magnetic microdroplets suffer from several challenges, including lack of monodispersity, inflexibility in core–shell combinations, and complex device architecture to achieve encapsulation. Herein, a facile magnet‐assisted framework to controllably wrap ferrofluid (FF) droplets inside polydimethylsiloxane (PDMS) floating on a water bath is developed. A permanent magnet placed at the bottom of a static glass cuvette pulls the ferrofluid droplet across the PDMS–water interface, which results in the wrapping of the FF droplet by a thin PDMS layer. The deformation of the FF–PDMS interface and the encapsulation of FF inside PDMS thereof is attributed to the interplay of magnetic force and force due to PDMS–water interfacial tension. Based on the experimental observations, three regimes are identified, namely, stable encapsulation, unstable encapsulation, and no encapsulation, which depends on the magnetic Bond number (Bom) and the thickness of the PDMS layer (δ). The versatility of the technique is demonstrated further by showing stable wrapping of multiple ferrofluid droplets inside the same encapsulated cargo and successful underwater manipulation of the encapsulated droplets, which finds relevance in the encapsulation and magnet‐assisted actuation of novel encapsulated materials.