Hollow polyelectrolyte capsules in micro- and submicrometer size were prepared. Their interior was functionalized by a "ship in bottle" synthesis of copolymers. While the monomers permeated the capsule wall easily, the formed polymers remained in the capsule cage. The physicochemical properties of the capsule interior such as ion strength, pH, light absorption, and fluorescence could be controlled independently from the surrounding solvent by means of the chemical nature of the captured polymer. In case of polyelectrolytes the osmotic pressure of the counterions led to a swelling of the capsules which can be important for micromechanics. The functionalization with light-sensitive materials allowed selective photoreactions inside the capsules. Synthesis of polyelectrolytes at high concentration resulted in an intertwining of the capsule wall with the polymer. The modified walls behaved like ion exchange membranes and showed selectivity toward adsorption and permeation of organic ions. The modified capsules offer many possibilities for novel applications as containers for controlled precipitation, as nanoreactors for catalyzed reactions, or as sensors.