Sodium alginate is one of the most interesting and the most investigated and applied biopolymers due to its advantageous properties. Among them, easy, simple, mild, rapid, non-toxic gelation by divalent cations is the most important. In addition, it is abundant, low-cost, eco-friendly, bio-compatible, bio-adhesive, biodegradable, stable, etc. All those properties were systematically considered within this review. Carotenoids are functional components in the human diet with plenty of health benefits. However, their sensitivity to environmental and process stresses, chemical instability, easy oxidation, low water solubility, and bioavailability limit their food and pharmaceutical applications. Encapsulation may help in overcoming these limitations and within this review, the role of alginate-based encapsulation systems in improving the stability and bioavailability of carotenoids is explored. It may be concluded that all alginate-based systems increase carotenoid stability, but only those of micro- and nano-size, as well as emulsion-based, may improve their low bioaccessibility. In addition, the incorporation of other biopolymers may further improve encapsulation system properties. Furthermore, the main techniques for evaluating the encapsulation are briefly considered. This review critically and profoundly explains the role of alginates in improving the encapsulation process of carotenoids, suggesting the best alternatives for those systems. Moreover, it provides a comprehensive cover of recent advances in this field.