The present work investigates the in vitro cholesterol reduction bioactivity of epigallocatechin gallate (EGCG) prior to and after nano-encapsulation using potato starch nanoparticle (SNP) as wall material. EGCG encapsulation in potato SNPs was achieved through a green inclusion complexation method. The encapsulated EGCG was characterized for its morphology, thermal, and crystalline properties using FESEM, DSC, XRD, and Fourier transform infrared (FTIR) studies. The bioactivity of EGCG to reduce gut cholesterol was studied using in vitro micellar cholesterol solubility study. The encapsulated EGCG exhibited enhanced thermal and crystalline properties. The FESEM results indicated successful nano-encapsulation of EGCG at 20-120nm diameter. The melting point enhanced from 225.7°C in EGCG to 282.9°C in encapsulated EGCG. The crystallinity also enhanced and could be observed through the increased intensity in the encapsulated EGCG. The FTIR results affirmed a shifting of peaks at 3675, 2927, 1730, and 1646cm-1, which corresponds to formation of new H bonds and confirms successful encapsulation of EGCG in SNPs. Further, EGCG had significantly reduced the cholesterol concentration by 91.63% as observed through the in vitro micellar inhibition study. The encapsulated EGCG was not able to reduce cholesterol as observed in the in vitro micellar cholesterol solubility study. This effect occurred due to the unavailability of EGCG after it formed a complex with SNPs. PRACTICAL APPLICATION: This study first investigates the utilization of newly synthesized potato starch nanoparticles as a coating material for nano-encapsulation of EGCG. The enhanced thermal and crystalline properties of these nanoparticles contribute to improved attributes in the nano-encapsulated EGCG. Such properties hold promise for applications in functional food matrices subjected to high-temperature processing, including functional cookies, bread, and cakes. Furthermore, this research explores the bioactivity of EGCG concerning its capacity to reduce gut cholesterol levels. It also examines the potential application of nano-encapsulated EGCG in lowering gut cholesterol through a micellar solubility study.