Endoscopic investigation has a critical role in the diagnosis and treatment of gastrointestinal (GI) diseases. Since 2001, capsule endoscopy (CE) has been available for small-bowel exploration and is under continuous development. During the past decade, CE has achieved impressive improvements in areas such as miniaturization, resolution, and battery life. As a result, CE is currently a first-line tool for the investigation of the small bowel in obscure gastrointestinal bleeding and is a useful alternative to wired enteroscopy. Nevertheless, CE still has several limitations, such as incomplete examination and limited diagnostic and therapeutic capabilities. To resolve these problems, many groups have suggested several models (e.g., controlled CO2 insufflation system, magnetic navigation system, mobile robotic platform, tagging and biopsy equipment, and targeted drug-delivery system), which are in development. In the near future, new technological advances will improve the capabilities of CE and broaden its spectrum of applications not only for the small bowel but also for the colon, stomach, and esophagus. The purpose of this review is to introduce the current status of CE and to review the ongoing development of solutions to address its limitations.