Self-assembled nanocapsules containing a hydrophilic core and a crosslinked yet thermosensitive shell are successfully prepared using poly(ethylene-oxide) poly(propylene-oxide)-poly(ethylene-oxide) block copolymers, 4-nitrophenyl chloroformate, gelatin, and 1-ethyl-3-(3-dimethylaminopropyl) carbodiimide. The core is further rendered magnetic by incorporating iron oxide nanoparticles via internal precipitation to enable externally controlled actuation under magnetic induction. The spherical nanocapsules exhibit a hydrophilic-to-hydrophobic transition at a characteristic but tunable temperature reaching 40 degrees C, triggering a size contraction and shrinkage of the core. The core content experiences very little leakage at 25 degrees C, has a half life about 5 h at 45 degrees C, but bursts out within a few minutes under magnetic heating due to iron oxide coarsening and core/shell disruption. Such burst-like response may be utilized for controlled drug release as illustrated here using a model drug Vitamin B12.