Lycopene is one of the 600 carotenoids found in nature and can be easily identified in tomatoes. Several epidemiological studies report that lycopene rich diets have beneficial effects on human health, showing strong correlations between the intake of carotenoids and a reduced risk of cancer, coronary and cardiovascular diseases. The purpose of this study was to develop a simple and effective method for solvent extraction of lycopene from tomato paste, and to stabilise and encapsulate the lycopene in the form of sodium-alginate beads. The Soxhlet method was used for the extraction of lycopene from commercially available tomato paste. Several solvents were tested, and ethyl acetate was found to be the best solvent for extraction, resulting in the separation of more lycopene than other solvents. Due to the presence of unsaturated bonds in its molecular structure, lycopene is susceptible to oxidation and degrades easily when exposed to light and heat. In the food processing field, microencapsulation techniques have been widely used to protect food ingredients against deterioration, volatile losses, or interaction with other ingredients and factors. Lycopene was encapsulated in 4% alginate (4g/100 mL), 1% agar-agar and chitosan. The stability of the resulting beads was tested under conditions to simulate those in the human intestine. The lycopene beads showed good survivability when exposed to the acidic conditions such as those in the gastric environment (pH 2.0–3.0). The lycopene release rate was best at higher pH levels (pH 6.6) such as in the intestine, which is where nutrient absorption occurs. The release rate of chitosan-coated alginate-lycopene was found to be much faster at body temperature (37°C) than at 24°C. The experimental results show that Ca-alginate chitosan coated lycopene beads have a potential application as pH/temperature-controlled drug release carriers in the biomedical field.