Abstract: Capsule catalysts composed of pre-shaped core catalysts and layer zeolites have been widely used in the tandem reactions where multiple continuous reactions are combined into one process. They show excellent catalytic performance in heterogeneous catalysis, including the direct synthesis of middle isoparaffins or dimethyl ether from syngas, as compared to the conventional hybrid catalysts. The present review highlights the recent development in the design of capsule catalysts and their catalytic applications in heterogeneous catalysis. The capsule catalyst preparation methods are introduced in detail, such as hydrothermal synthesis method, dual-layer method, physically adhesive method and single crystal crystallization method. Furthermore, several new applications of capsule catalysts in heterogeneous catalytic processes are presented such as in the direct synthesis of liquefied petroleum gas from syngas, the direct synthesis of para-xylene from syngas and methane dehydroaromatization. In addition, the development in the design of multifunctional capsule catalysts is discussed, which makes the capsule catalyst not just a simple combination of two different catalysts, but has some special functions such as changing the surface hydrophobic or acid properties of the core catalysts. Finally, the future perspectives of the design and applications of capsule catalysts in heterogeneous catalysis are provided.