Achieving localized delivery of small molecule drugs has the potential to increase efficacy and reduce off target and side effects associated with systemic distribution. Herein, we explore the potential use of layer-by-layer (LbL) assembled microcapsules for the delivery of doxycycline. Absorbance of doxycycline onto core dextran sulfate of preassembled microcapsules provides an efficient method to load both synthetic and biodegradable microcapsules with the drug. Application of an outer layer lipid coat enhances the sustained in vitro release of doxycycline from both microcapsule types. To monitor doxycycline delivery in a biological system, C2C12 mouse myoblasts are engineered to express EGFP under the control of the optimized components of the tetracycline regulated gene expression system. Microcapsules are not toxic to these cells, and upon delivery to the cells, EGFP is more efficiently induced in those cells that contain engulfed microcapsules and monitored EGFP expression clearly demonstrates that synthetic microcapsules with a DPPC coat are the most efficient for sustain intracellular delivery. Doxycycline released from microcapsules also displayed sustained activity in an antimicrobial growth inhibition assay compared with doxycycline solution. This study reveals the potential for LbL microcapsules in small molecule drug delivery and their feasible use for achieving prolonged doxycycline activity.