In recent years, a number of studies have produced evidence to suggest that consuming carotenoids may provide a variety of health benefits including a reduced incidence of a number of cancers, reduced risk of cardiovascular disease, and improved eye health. Evolving evidence on the health benefits of several carotenoids has sparked interest in incorporating more carotenoids into functional food products. Unfortunately, the same structural attributes of carotenoids that are thought to impart health benefits also make these compounds highly susceptible to oxidation. Given the susceptibility of carotenoids to degradation, particularly once they have been extracted from biological tissues, it is important to understand the major mechanisms of oxidation in order to design delivery systems that protect these compounds when they are used as functional food ingredients. This article reviews current understanding of the oxidation mechanisms by which carotenoids are degraded, including pathways induced by heat, light, oxygen, acid, transition metal, or interactions with radical species. In addition, several carotenoid delivery systems are evaluated for their potential to decrease carotenoid degradation in functional food products.