Despite our increasing knowledge of cell biology and the recognition of an increasing repertoire of druggable intracellular therapeutic targets, there remain a limited number of approaches to deliver bioactive molecules to cells and even fewer that enable targeted delivery. Layer-by-layer (LbL) microcapsules are assembled using alternate layers of oppositely charged molecules and are potential cell delivery vehicles for applications in nanomedicine. There are a wide variety of charged molecules that can be included in the microcapsule structure including metal nanoparticles that introduce physical attributes. Delivery of bioactive molecules to cells with LbL microcapsules has recently been demonstrated, so in this study we explore the delivery of bioactive molecules (luciferase enzyme and plasmid DNA) to cells using biodegradable microcapsules containing a layer of magnetite nanoparticles. Interestingly, significantly improved intracellular luciferase enzyme activity (25 fold) and increased transfection efficiency with plasmid DNA (3.4 fold) was observed with magnetic microcapsules. The use of a neodymium magnet enabled efficient targeting of magnetic microcapsules which further improved the delivery efficiency of the cargoes as a consequence of increased microcapsule concentration at the magnetic site. Microcapsules were well tolerated by cells in these experiments and only displayed signs of toxicity at a capsule: cell ratio of 100: 1 and with extended exposure. These studies illustrate how multi-functionalization of LbL microcapsules can improve and target delivery of bioactive molecules to cells.