The preparation of environmentally friendly inorganic encapsulated pigments with a bright color and sufficient stability provides an effective strategy for expanding their applications in plastic, paint, glass, and ceramic decoration. The challenges facing the use of such pigments include the formation of a dense protective coating with the required endurance, the relatively weak color of the encapsulated pigments, and the preferable inclusion particle size. Environmentally friendly BiVO4 is regarded as a very promising pigment for multiple coloring applications due to its brilliant yellow color with high saturation. However, its poor thermal and chemical stability greatly limit the application of BiVO4. Herein, we report a sol–gel method to synthesize inorganic BiVO4@SiO2 yellow pigment with a core–shell structure. By controlling the synthesis conditions, including the particle size and dispersion of BiVO4 and the calcination temperature, a BiVO4@SiO2 encapsulated pigment with excellent chromatic properties was achieved. The obtained environmentally friendly BiVO4@SiO2 pigment with encapsulation modification has a comparable color-rendering performance to BiVO4, and it has a high thermal stability at 700 °C, excellent acid resistance, and good compatibility in plastics. The present research is expected to expand the application of yellow BiVO4 pigment in harsh environments.