Health claims of probiotic functional foods are well recognized in this era that include antimicrobial activities, resistance against cancer, total sugar metabolism improvement, serum cholesterol reduction, antibiotic therapy and activation of immune system. Longevity of probiotics in food products is the main concern for maximum utility as value added and therapeutic food products. Microencapsulation is an innovative technique and of prime importance to keep lactic acid bacteria (LAB) alive/viable during product storage and GIT transit. The objective of the present study was to investigate the effect of encapsulation on stability of B. bifidum ATCC 35914 during GIT transit, heat treatment and in yoghurt production. The impact of microbeads on the hypercholesterolemia was also under consideration.The encapsulation was carried out in two experimental plans. In plan I, the B. bifidum ATCC 35914 were single coated with sodium alginate (SA) at 4, 5 and 6% and chitosan (CH) at 0.6, 0.8 and 1.0% concentrations into micro beads.Based on their higher viable count and encapsulation efficiency, micro beads prepared with SA 6% and CH 0.8% were selected for the experimental plan II, where these micro beads were further (double) coated with whey protein concentrate (WPC) using 5.0, 7.5 and 10.0% concentration levels. From this part of study micro bead prepared with SA 6% - WPC 5% and CH 0.8% - WPC 5% were selected based on their efficiency. During examination under SEM, SA 6% - WPC 5% micro beads appeared as hollow structured particles with blow-hole on the surface, while CH 0.8% - WPC 5% micro beads exhibit uneven shrinkage and wrinkled in shape. In-vitro study demonstrated that free cells of B. bifidum were extremely sensitive as compared to SA 6% - WPC 5% and CH 0.8% - WPC 5% micro beads during GIT tolerance. The free cells of B. bifidum ATCC 35914 were extremely sensitive to acidic (pH 2.0) as compared to alkaline environments.It was concluded from this experiment that encapsulated double layered B. bifidum ATCC 35914 micro beads survive better at pH of 3.0 for at least 90 min in simulated gastric juice as well as at the pH range of 7.0-7.5 in simulated intestinal juice, and showed higher viability (up to 6 Log10 CFU/mL). It was also observed that the complete release of the cells from the micro beads was achieved at 4th h incubation with the significant retention in the survival rates of the probiotic strain.It was concluded from heat tolerance that double coated micro beads showed the higher heat tolerance at 35 ºC for 60 min as compared to free cells. The double coated probiotic micro beads when added in yoghurt production along with the starter cultures showed the non-significant difference during sensory evaluation with the control. The viable count of probiotic and yoghurt cultures were affected significantly (p < 0.01) during refrigerated storage of yoghurt. In-vivo study showed that drugs had the higher effect than encapsulated micro beads. The micro beads containing SA 6% - WPC 5% were better in the reduction of cholesterol in rats than free cells and micro beads of CH 0.8% - WPC 5%. It was concluded from the whole study that double encapsulation using CH 0.8% - WPC 5% has more potential to increase the viability of probiotics than free cell. They have higher resistant to GIT and thermal conditions, hence the micro beads containing SA 6% - WPC 5% showed more potential in the reduction of blood cholesterol level.