Capsaicin has known health beneficial and therapeutic properties. It is also able to enhance the permeability of drugs across epithelial tissues. Unfortunately, due to its pungency the oral administration of capsaicin is limited. To this end, we assessed the effect of nanoencapsulation of capsaicin, under the hypothesis that this would reduce its pungency. Core-shell nanocapsules with an oily core and stabilized with phospholipids were used. This system was used with or without chitosan coating. In this work, we investigated the in vitro release behavior of capsaicin-loaded formulations in different physiological media (including simulated saliva fluid). We also evaluated the influence of encapsulation of capsaicin on the cell viability of buccal cells (TR146). To study the changes in pungency after encapsulation we carried out a sensory analysis with a trained panel of 24 students. The in vitro release study showed that the systems discharged capsaicin slowly in a monotonic manner and that the chitosan coating had an effect on the release profile. The cytotoxic response of TR146 cells to capsaicin at a concentration of 500 μM, which was evident for the free compound, was reduced following its encapsulation. The sensory study revealed that a chitosan coating results in a lower threshold of perception of the formulation. The nanoencapsulation of capsaicin resulted in attenuation of the sensation of pungency significantly. However, the presence of a chitosan shell around the nanoformulations did not mask the pungency, when compared with uncoated systems.