This work reported the heterogeneous rhodium oxide catalyst encapsulated within microporous silicalite-1 (S-1) zeolite (Rh2O3@S-1) through epitaxial growth of S-1 seeds pre-anchored with rhodium species. Based on scanning electron microscopy (SEM), transmission electron microscopy (TEM), and X-ray photoelectron spectroscopy (XPS) results, S-1 seeds were successfully covered by the S-1 shell and rhodium oxide was meanwhile well embedded within the zeolitic microchannel. Furthermore, a thicker S-1 shell could be modulated by secondary epitaxial growth of the as-synthesized Rh2O3@S-1 (Rh2O3@S-1-II). Those catalysts, for the first time, were applied in hydroformylation of terminal olefins, i.e., 1-hexene, 1-octene, 1-decene, and 1-dodecene, and exhibited enhanced regioselectivity compared with the supported Rh2O3/S-1 catalyst. Strikingly, with more abundant and integrated S-1 microchannels, Rh2O3@S-1-II manifested relatively the most competitive regioselectivity in the field of ligand- free rhodium nanoparticle catalysts. Experimental results and spectroscopy investigations revealed that the promoted regioselectivity was the consequence of distinctive product diffusion rates endowed by the intrinsically steric hindrance of the S-1 microchannel around the rhodium oxide.