The restriction of antibiotic growth promoters (AGPs) in poultry production has increased the interest in phytobiotics as alternative feed additives for broiler chickens. However, the application of free-form phytobiotics is often limited by their instability, poor solubility, volatility, and inconsistent bioavailability. This systematic literature review followed the PRISMA 2020 framework and synthesized evidence from 12 experimental studies that evaluated micro- and nanoencapsulated phytobiotics in broiler chickens. The included studies covered diverse phytobiotic sources, including essential oils, plant extracts, silymarin, mangosteen rind extract, eucalyptus oil, and Peronema canescens leaf extract. Encapsulation systems include chitosan-based nanoparticles, alginate-based matrices, and spray-dried carbohydrate–protein carriers. Overall, encapsulation enhances phytobiotic functionality by improving stability, protecting bioactive compounds from degradation, and enabling controlled gastrointestinal release. Across studies, encapsulated phytobiotics have been associated with improved growth performance, feed efficiency, intestinal morphology, microbial balance, antioxidant status, immune regulation, and meat quality, particularly under disease or stress challenge conditions. Chitosan-based systems were frequently linked to enhanced mucosal interaction and microbiota modulation, whereas alginate and spray-dried matrices were more suitable for protecting hydrophobic and volatile compounds. Importantly, the observed responses were formulation-dependent and varied with the matrix type, dose, particle characteristics, and experimental conditions. Therefore, encapsulated phytobiotics should be considered context-specific, formulation-driven strategies that may support broiler health and reduce reliance on AGPs under defined conditions, rather than as universal replacements for antibiotics.