Internal cellular organization is a defining feature of life, and encapsulins are an effective, protein-based method for prokaryotic cells to achieve compartmentalization of chemical reactions and metabolic processes. The defining feature of encapsulins is their ability to encapsulate cargo proteins inside a self-assembling protein shell, mediated by cargo-encoded targeting peptides or domains. The biochemical and physiological function of an encapsulin system is dictated by the catalytic activity of encapsulated components, with the protein shell acting as a selectively permeable diffusion barrier. Encapsulating cargo proteins confers multiple advantages, including enhanced stability, increased activity, regulatory control, and sequestration of reactive intermediates or reaction products. Encapsulin-cargo systems have key functions in elemental homeostasis, storage, stress resistance, and varied anabolic pathways. This review will focus on the so far characterized cargo proteins encapsulated within encapsulin shells, specifically their catalytic mechanisms and the particular reasons and benefits for protein encapsulation.