Liquid crystal (LC) ordering and phase transition behavior under confined conditions have attracted extensive attention and enabled many applications. However, the ordering and phase transition behavior of LCs in submicrometer capsules have seldom been studied, primarily due to the lack of proper capsulizing and visualization approaches to such small LC microcapsules. Herein, we achieve submicrometer LC capsules with the sizes down to 100 nm by using emulsion based interfacial sol gel reaction. The behavior of LCs under the submicrometer confinement conditions is investigated while the sizes and chemical composition of the microcapsule shell surface are tuned in a controllable way. The phase transition temperatures of LCs in the submicrometer capsules shift from those of bulk LCs due to the surface-induced ordering of LCs under the strong confinement conditions, which causes formation of topological defects and alters the order parameter. Using nonlinear optical imaging technology, we explore the structures of director field of LCs that arise as a result of the competition between the surface boundary conditions and LC elasticity. The results show that the nanoscale encapsulation can significantly influence the structural configurations of the director and phase transitions of LCs under various confinement conditions.