Multilayer polyelectrolyte capsules made by layer-by-layer assembly of oppositely charged biodegradable polyelectrolytes were filled with a model of a nonactive prodrug, a self-quenched fluorescence-labeled protein. After capsule uptake by living cells, the walls of the capsules were actively degraded and digested by intracellular proteases. Upon capsule wall degradation, intracellular proteases could reach the protein cargo in the cavity of the capsules. Enzymatic fragmentation of the self-quenched fluorescence-labeled protein by proteases led to individual fluorescence-labeled peptides and thus revoked self-quenching of the dye. In this way nonactive (nonfluorescent) molecules were converted into active (fluorescent) molecules. The data demonstrates that biodegradable capsules are able to convert nonactive molecules (prodrugs) to active molecules (drugs) specifically only inside cells where appropriate enzymes are at hand. In this way only cargo inside the capsules reaching cells is activated, but not the cargo in capsules which remain extracellular. The peptide fragments undergo further processing inside the cells, leading ultimately to exocytosis.