We explored using a magnetic field to modulate the permeability of polyelectrolyte microcapsules prepared by layer-by-layer self-assembly. Ferromagnetic gold-coated cobalt (Co@Au) nanoparticles (3 nm diameter) were embedded inside the capsule walls. The final 5 mum diameter microcapsules had wall structures consisting of 4 bilayers of poly(sodium styrene sulfonate)/poly(allylamine hydrochloride) (PSS/PAH), 1 layer of Co@Au, and 5 bilayers of PSS/PATL External alternating magnetic fields of 100-300 Hz and 1200 Oe were applied to rotate the embedded Co@Au nanoparticles, which subsequently disturbed and distorted the capsule wall and drastically increased its permeability to macromolecules like FITC-labeled dextran. The capsule permeability change was estimated by taking the capsule interior and exterior fluorescent intensity ratio using confocal laser scanning microscopy. Capsules with 1 layer of Co@Au nanoparticles and 10 polyelectrolyte bilayers are optimal for magnetically controlling permeability. A theoretical explanation was proposed for the permeability control mechanisms. "Switching on" of these microcapsules using a magnetic field makes this method a good candidate for controlled drug delivery in biomedical applications.