The use of templates in materials chemistry is a well-established approach for producing membrane-bounded hollow spheres used for microencapsulation applications, but also in synthetic biology to assemble artificial cell-like compartments. Sacrificial solid or gel micro-particles, but also liquid-like oil-in-water or water-in-oil emulsion droplets are routinely used as templates to produce capsules. Yet, disruption of the core sacrificial material often requires harsh experimental conditions, such as organic solvents, which limits the use of such approach to encapsulate fragile solutes, including biomo-lecules. Recently, water-in-water emulsion droplets have emerged as promising alternative templates to produce capsules in solventfree conditions. These water-in-water droplets result from liquid-liquid phase separation in dilute aqueous polymer or surfactants solutions. Their ease of preparation, the large palette of components they can be assembled from and the lack of harsh solvent or oil used for their production make water-in-water emulsions of practical importance in materials chemistry. Water-in-water droplets can also spontaneously sequester solutes by equilibrium partitioning, which provides a simple strategy to locally accumulate molecules of interest and encapsulate them in capsules after interfacial shell formation. Here, we review recent works that employ waterin-water emulsion droplets to prepare capsules and suggest possible additional applications in materials chemistry.