Drops are omnipresent in our daily life for example in the form of rain drops or as oil drops in a salad dressing. On a technological basis, drops can be used to conduct chemical or biological reactions. These drops often serve as templates to produce materials such as micro- or nanoparticles, which find applications for example as drug carriers, containers to encapsulate probiotics, food additives, fragrances or cosmetic products. The performance of these materials largely depends on their size, morphology and structure. Therefore it is important to develop production routes that have a high degree of control over these parameters. In this thesis, we study new methods to produce drops with defined sizes and develop new protocols to convert drops into nanoparticles and microcapsules. In the first part, we present a microfluidic spray-dryer that produces defined liquid aerosol drops with sizes of only a few micrometers. These micron-sized drops are produced with a surface acoustic wave (SAW) based atomizer and contain reagents that solidify upon solvent evaporation at room temperature to yield nanoparticles with non-equilibrium structures. In fact, the aerosol drops are so rapidly dried, that crystallization of drugs is kinetically suppressed, resulting in amorphous nanoparticles. An amorphous formulation significantly increases the bioavailability of poorly water-soluble drugs. The synthesis of amorphous drugs thus plays an important role in the development of new pharmaceuticals. The fast drying also enables the formation of amorphous precursors of biominerals such as calcium carbonate or calcium oxalate. Our spray-dryer provides a platform that has the spatial and temporal resolution to study such small and short-lived species that form during the crystallization process of these materials. Instead of drying the drops, in the second part we present a new and scalable process to form emulsion drops. We produce aqueous aerosol drops with a SAW atomizer and transfer them into an oil bath resulting in a water-in-oil emulsion. The drop size of the emulsion scales with that of the produced aerosol drops and can be tuned with the excitation frequency of the atomizer. We find that the engulfment of the aerosol drops is thermodynamically driven and present design principles that enable the emulsification process. The emulsion drops can be loaded with reagents to further transform the drops to hydrogel microspheres or microcapsules with well defined sizes. The SAW device and many other methods enable a controlled formation of single emulsion drops. However, uniform capsules with thin shells are often produced from double emulsion drops. But the controlled fabrication of double emulsion drops is more involved and thus more difficult to scale up. To overcome this challenge we develop a method to form capsules with thin shells from single emulsion drops. Uniform single emulsion drops, which are easy to fabricate with microfluidic tools, are converted to thin-walled hydrogel capsules through a cross-linking process occurring at the drop surface. We show that these selectively permeable capsules can be used to culture cells and encapsulate active materials to clean waste water.