The present paper describes the synthesis of water dispersible SiO2@NaYF4:Yb/Er core-shell beads with green upconversion luminescence which are further converted to NaYF4: Yb/Er capsules by dissolving silica core. The beads and the capsules having sub-micrometer size are designed for biomedical applications such as photoluminescence imaging and drug delivery. Silica template particles are first coated by Y(OH)CO3:Yb/Er shell using an urea precipitation method and the shell is further converted to NaYF4: Yb/Er shell by a facile solvothermal treatment. The annealing is done to obtain the beads followed by etching with NaOH solution resulting in capsular structure. The upconversion beads and capsules both possess excellent luminescence properties as evaluated by upconversion luminescence spectroscopy which is of pivotal importance for biomedical imaging. The beads and the capsules are inherently water dispersible and can provide an excellent platform for biomedical imaging and drug delivery. (C) 2015 Elsevier Ltd. All rights reserved.