There is a recent surge in demand for nutritious food from the consumer end. Functional foods are gaining much popularity. With the commercialization of omega-3 fatty acids and their many nutritional advantages, edible powders and smoothies loaded with PUFA are available on the market. Edible oil powders are one such commodity that is consumed for their several nutraceutical properties such as, reducing cardiovascular risk, aiding in weight reduction, providing antioxidant properties, etc. Edible oil is first stabilized into stable emulsions which are then processed to obtain powders. The process of oil-in-water emulsion stabilization is carried out using ultrasonication, homogenization, microfluidization, complex coacervation, and oil structuring mechanisms. The stable emulsions are then microencapsulated using various wall material combinations and ratios to form stable edible oil powders. The wall material protects the active molecules from the ambient environment, high temperature, and high-pressure processing methods. These powders are added to coffee, smoothies, cookies, yogurt, cake mix, and soup powder to impart functional properties to foods. The major challenge in the production of oil powder is the formation of stable emulsion with proper wall-to-core ratio and binding of the wall with core materials to form stable powder with an increased shelf life. This article provides a detailed review of various emulsion stabilization techniques and processing methods to form edible oil powders.